Newly-formed industry body, the Crypto Asset Association of South Africa (CAASA), has enforced a “code of conduct and ethics” in a bid to flush out bad actors from the sector.
The move comes as South African authorities are making strides to regulate the burgeoning crypto-currency market.
After years of taking the stance that it would not regulate the crypto-currency industry, the South African Reserve Bank (SARB) last month said it had re-examined its previous position and is now working to introduce a regulatory framework to govern crypto transactions.
Almost six years ago, the central bank of SA had no intention to regulate the crypto-currency industry, as it is classified as an asset, rather than a currency.
The SARB is primarily concerned with implementing a regulatory framework that ensures adherence to anti-money-laundering legislation and exchange controls.
The brainchild of one of SA’s oldest crypto exchanges AltCoinTrader, CAASA, which was formed last year, now has 25 signatories.
David Porter from AltCoinTrader was the driving force behind the creation of CAASA. This, after he distributed a white paper in July 2021 following the June release of the Intergovernmental Fintech Working Group’s position paper on crypto assets.
The white paper, in essence, shared the rationale for the creation of an industry association that focuses exclusively on the crypto asset industry and called for an industry-wide meeting to determine if there was a desire to establish an association.
Speaking up
In addition, Porter notes there was a genuine feeling among some of the players in the industry that their voice was not being heard by either the regulators or the media.
“Typically, we find media queries and regulatory engagement are directed towards the larger players in the market,” he says.
“However, this potentially ignores the input from smaller players and the business models, innovation, job creation, solutions, etc, occurring at these levels.
“Beyond our own business and customer base, AltCoinTrader has always believed in the development of a robust, ethical crypto asset industry and educated crypto community, and it was for this reason that AltCoinTrader sponsored and played an instrumental role in the formation of CAASA.
“We consider the founding members of CAASA to be those that attended the first few discussions and supported the creation of the association,” Porter says.
These companies include: AltCoinTrader, Arbatunity, BitMart, Block Alpha, Cape Crypto, Cbucks, Chainex.io, Chainlink Capital, Dark Wall Ventures, Easycrypto.ai, FutureForex, Jdax, Krpt.io, LunaTech, Ovex, Shiftly, SmartCryptoSolutions.com, Vanirtech.io and Xago Technologies.
“In terms of the leadership team, we have only recently agreed on our governance structure, which allows for a chairman and a secretary who will be voted for on an annual basis.
“We have delayed appointments to these positions due to having very full agendas and robust discussions following the industry meeting hosted by the FIC [Financial Intelligence Centre] and SARB in June.”
According to Porter, the association has formalised and agreed to a “Code of Conduct and Ethics” which all members are required to sign on an annual basis to re-commit themselves to principles relating to ethical business practices and the fair treatment of customers.
“As members, we are to hold ourselves accountable to the code of conduct and ethics. The benefit of the association is that there are many ‘ears to the ground’, so if one of our members is in breach of the code of conduct and a complaint is raised, our governance structure dictates the formation of an ad hoc ethics sub-committee to determine if the firm is in breach of the code and if they can retain their CAASA membership.
“In effect, the deterrent is the potential media exposure a firm may get if their membership to CAASA is withdrawn off the back of a breach in the code of conduct and ethics. If a non-member is conducting unethical business within our industry, we are, unfortunately, constrained in terms of the actions CAASA can take. However, we view it as our responsibility to inform the relevant authorities.”
The coming together of the local industry follows South Africans losing millions of rands in crypto scams, including the much-publicised Mirror Trading International, as well as Africrypt.
“We have grown our membership to 25 locally-registered crypto firms. In addition, we have a few ‘associate members’ that aren’t crypto firms in their own right but have a vested interest in our industry, such as law firms, auditors and consultants.
“Our vision is to promote ethical and accountable self-governance among crypto asset service providers, working within the bounds of a fit-for-purpose regulatory framework, enabling the industry to realise its potential to transform SA through both economic and socio-economic benefits.”
The time is right
According to Porter, CAASA is also actively engaging with authorities in the formulation of crypto-related regulations.
“We have written letters directly to some of SA’s financial sector regulators, but we wish for greater regulatory engagement that includes some of the smaller players. CAASA provides a wonderful opportunity for the regulators to engage a cross-section of the industry through a single point of contact at a time when government is pushing for small business development and job creation.”
Responding to the SARB’s move to regulate the industry, Porter comments: “As CAASA, we are intrinsically pro-regulation, if it is fit-for-purpose.
“We understand that regulating crypto assets is an inherently difficult task if we are seeking a regulatory framework that encourages growth of the industry, protection of customers and the mitigation of risk(s). We believe the SARB and FIC have some good foundational elements for an effective regulatory regime; however, we also believe some of the items under consideration may not be effective in meeting their desired outcomes.
“As CAASA, we are committed to availing ourselves to have these discussions and work with regulators in the creation of a robust and fit-for-purpose regulatory framework,” he concludes.
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