South Africa Embraces Stablecoins & Blockchain For Financial Inclusion

South Africa’s National Treasury has unveiled its plan to foster the adoption of digital payments in the country as part of its 2024 budget review. The plan includes exploring the potential of stablecoins and blockchain to enhance the financial access and well-being of the underserved segments of society.

The budget review, highlighting the need for structural reforms and better public financial management, announced a forthcoming policy change on crypto assets, especially stablecoins. Stablecoins are a type of crypto asset pegged to a fiat currency or a basket of assets that aims to provide price stability and lower volatility.

The Treasury stated that the Intergovernmental Fintech Working Group, which published a crypto regulation paper in June 2021, will update its framework to include stablecoins as a specific category of crypto assets. The working group will also comprehensively analyse stablecoins’ use cases and policy implications and provide appropriate recommendations.

The report read:

It will conduct analytical work to understand the applicable use cases of stablecoins and to recommend an appropriate policy and regulatory response.

Exploring Stablecoins: Switzerland Partner In Pilot Digital Payment Projects

Moreover, the budget review revealed that South Africa will also investigate the impact of blockchain-based tokenization on its financial markets. Tokenization converts real-world assets, such as stocks, bonds, or commodities, into digital tokens that can be traded and transferred on a blockchain network.

Additionally, by Dec 2024, the working group will publish a paper that outlines how tokenization and blockchain-based financial market infrastructure affect policy and regulation.

In addition, the South African government will collaborate with Switzerland’s State Secretariat for Economic Affairs and FinMark Trust. This non-profit organization promotes financial inclusion and will launch four digital payment pilot projects over the next three years.

The pilot projects will focus on community digitalization, digitizing payments for informal and low-income workers, cross-border remittances, and cross-border trade. The initiative aims to support small and informal businesses through payment innovation.

The budget review also highlighted the success of blockchain technology in opening up global markets for East African farmers. On July 20, 2023, AgTech firm Dimitra and One Million Avocados (OMA), a sustainability-oriented tech group, announced a partnership to help Kenyan avocado farmers improve their production and quality through advanced technologies, including blockchain.

Related Reading | Surprise Twist: Ex-SEC Leader Enters Crypto Fray, Targets Ripple & Coinbase

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