South Africa’s financial regulators recommended cryptocurrency “remain without legal tender status” in a Tuesday roadmap outlining what could become the nation’s first comprehensive crypto laws. 

According to the policy paper by South Africa’s “Intergovernmental Fintech Working Group” (IFWG), the burgeoning crypto asset sector – one survey suggests 10.7 percent of South African internet users invest in bitcoin – is past due for strict financial oversight, a licensure structure, closer cash flow monitoring and more. 

“Crypto assets and the various activities associated with this innovation can no longer remain outside of the regulatory perimeter,” said the IFWG, whose members include the South African Reserve Bank, the Financial Sector Conduct Authority and the National Treasury, among others. “Clear policy stances” must be formed. 

The policy paper would implement strict crypto oversight domestically. It would codify the Financial Action Task Force’s “new technologies” anti-money-laundering and “Travel Rule” recommendations, two international baselines for policing crypto businesses. Those businesses would also need to register with the AML watchdog the Financial Intelligence Centre. 

Read more: Inside the Standards Race for Implementing FATF’s Travel Rule

Crypto would face new formal restrictions on when and how it can be used. For example, the policy paper calls for a prohibition against using crypto as a settlement tool within South Africa’s financial infrastructure, but asks that crypto be recognized “for domestic payment purposes,” and be regulated accordingly.

“Payments using crypto assets will, in the interim period, be subjected to a regulatory sandbox approach,” the IFWG said.

On the matter of raising capital, the paper says Initial Coin Offering regulations “must be aligned, as far as possible” with South Africa’s traditional securities governance schemes. Even so, payment and utility tokens would also have to submit their white papers to the regulators.

The policy recommendations follow IFWG’s previous crypto consultation paper, issued in Jan 2019. IFWG’s newest recommendations are open for comment through May 15.