South Africa’s Minister of Finance, Enoch Godongwana has introduced a draft of legislation that provides restrictions guidelines on how pension fund member funds are invested, according to Regulation 28.
The old legislation allows portfolio managers to invest up to 2.5% of member funds in a broad category of “other assets,” which was used to include crypto assets. Now, the new rules explicitly exclude cryptocurrencies in the new Government Gazette.
The lack of protection for investors has led the South African regulators to express nagging suspicions about the speculative nature of cryptocurrencies, whilst simultaneously exploring the possible use cases for distributed ledger technology. Regulation 28 is the legislation that draws its clout from the Pension Funds Act to mandate how funds may invest. Part of Regulation 28 is to protect investors from investing too much in one particular asset class.
The South African government defines digital assets as a digital representation of value that doesn’t emanate from a central bank but can be traded, transferred, or stored electronically by natural and legal persons, which applies cryptographic techniques and uses distributed ledger technology.
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