South African pension funds are to be banned from investing in cryptocurrencies under new draft rules.
“A fund may not invest in crypto-assets directly or indirectly,” the proposed rule change states in the Government Gazette published Friday.
This would replace existing legislation that allowed portfolio managers to invest as much as 2.5% of funds in crypto as part of an umbrella “other assets” category.
The South African government defines a crypto asset as any digital representation of value “not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility; applies cryptographic techniques and uses distributed ledger technology.”
Such a broad definition points toward the ban extending to non-fungible tokens (NFTs) and similar tradeable digital assets.
Financial regulators in South Africa have in recent months indicated there would an acceleration in crypto regulation in response to retail investors being scammed by fraudulent investment firms.