Despite the recent market crash, Bitcoin adoption grew massively. According to reports, Bitcoin adoption will likely grow more than regulators had ever anticipated. The growth of Bitcoin in 2021 triggered major nations and institutional investors to adopt the currency and regulate it for payments. El Salvador became the first nation to adopt BTC. Besides this, recently the South African Reserve Bank said that it is ready to introduce regulations next year and treat cryptocurrencies as financial assets to find stability between security and innovation.
The country's chief policymaker said that there are a lot of controversies regarding the cryptocurrency sector and that the market is full of several meaningful projects that can be compared to scamming pyramid schemes. So, the institution decided to not ban the asset class, but instead, regulate it with a proper framework. Companies and individuals looking to provide advice or services based on digital assets inside the country should now be recognized as financial service providers. This would also involve adopting regulations set out by the Financial Action Task Force.
The South African National Treasury has already published in February 2022 that the country was moving to declare cryptocurrencies as financial products. The policymakers have also planned to enhance the monitoring and reporting of transactions to comply with exchange regulations in the country.
Under the current circumstances, the South African government's decision to regulate cryptocurrency might enhance the market's chances to set its course on the recovery path as soon as possible. For months, the market has been suffering due to various macroeconomic situations. And to make matters worse, the crypto market is increasingly following the tracks of the stock market, spreading fear and panic all over the market. This new initiative by South Africa should eventually impact the broader cryptocurrency market, quite positively.
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