South Africa Eyes Stablecoins and Blockchain to Enhance Digital Payment Efficiency

South Africa Eyes Stablecoins and Blockchain to Enhance Digital Payment Efficiency
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    The 2024 budget review of South Africa emphasized the necessity for structural changes and a concentration on enhancing public financial management.

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    In its annual budget, South Africa’s treasury unveiled initiatives aimed at fostering the adoption of digital payments, with a strategic focus on exploring stablecoins and blockchain technologies to enhance the well-being of marginalized communities.

    The 2024 budget review of the country underscored the importance for implementing structural reforms and enhancing public financial management practices. 

    Read Also: Regulations: South African Crypto Regulators Will Start Issuing out first Set Of Licenses

    Within this context, the National Treasury outlined its strategic vision to advance digital payments. Notably, it announced an impending policy shift concerning crypto assets, with a specific emphasis on stablecoins.

    In June 2021, the working group released a crypto regulation paper, slated for amendment to encompass stablecoins within the crypto asset class. Additionally, the group aims to complete a comprehensive assessment of the domestic stablecoin landscape, as outlined in the report.

    “It will conduct analytical work to understand the applicable use cases of stablecoins and to recommend an appropriate policy and regulatory response.”

    Furthermore, there is a proposal to amend the Financial Intelligence Centre Act, potentially mandating all institutions to report crypto transactions exceeding 49,999 South African rand ($2,650). South Africa is also poised to conduct a thorough examination of the implications of blockchain-based tokenization on domestic financial markets.

    In partnership with Switzerland’s State Secretariat for Economic Affairs and FinMark Trust, the South African government is set to embark on a three-year program. This initiative will oversee the implementation of four digital payments pilot projects aimed at bolstering small and informal businesses through payment innovation.

    The four pilot projects encompass community digitalization, the digitization of payments for informal and low-income workers, facilitating cross-border remittances, and enhancing cross-border trade. The overarching goal of these endeavors is to provide support to small and informal enterprises through innovative payment solutions.

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