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Lexology: A structured guide to Fintech in South Africa

2 March 2018
– 2 Minute Read


Bowmans lawyers Craig Kennedy, David Geral, Livia Dyer, Matthew Purchase, Tamara Dini, Claire Franklyn, Kate Beretta and Chloё Woodin contribute to Lexology Navigator’s structured Q&A guide to Fintech in South Africa.

General innovation climate
What is the general state of fintech innovation in your jurisdiction, including any notable trends, innovations, innovators and future prospects?

The outlook for fintech innovation is promising in South Africa, driven by the market demand for innovative products and services, the proven capacity of innovators and suppliers to respond to the demand and an inquisitive regulatory approach. Much activity is centred on payment systems, exchange control and applications (mobile or otherwise) that obviate the need to hold, or transact via, a bank account. The South African regulators (particularly the South African Reserve Bank (SARB)) are taking a keen interest in fintech developments and, although no bespoke fintech regulation exists, they have a fintech programme that is pro-fintech innovation.

Key technologies
Have there been any particular developments – regulatory or commercial – in distributed ledger technology and digital currencies (eg, blockchain, smart contracts and Bitcoin)?

Yes, there is significant industry-led activity around distributed ledger technology (DLT) and digital currencies. Various start-ups have developed products backed by digital currencies (eg, contracts for differences that reference cryptocurrencies as an underlying product). The number of cryptocurrency exchanges has increased and existing ones expanded to offer new cryptocurrencies.

Virtual currencies are currently not regulated and any transactions conducted are solely at the end-user’s risk. That said, the regulatory authorities have a positive attitude towards fintech in general. SARB has recently established the FinTech Programme to strategically assess the emergence of fintech in a structured and organised manner and consider its regulatory implications. The main goal of the programme is to track and analyse fintech developments and assist policymakers in formulating frameworks in response to these emerging innovations. According to the media statement issued by SARB on February 13 2018, the programme will focus on three primary objectives:

  • review SARB’s position on private cryptocurrencies to inform an appropriate policy framework and regulatory
  • investigate and decide on the applicability of innovation facilitators for SARB; and
  • launch Project Khokha, which will experiment with distributed ledger technologies.

This guide has been reproduced with permission of Lexology.
 Lexology Navigator is a research tool that guides users through the complex task of comparing different legislative and regulatory regimes across multiple jurisdictions.