South Africa’s financial regulator, the Financial Sector Conduct Authority (FSCA), has granted approval to 59 license applications from cryptocurrency platforms seeking to offer services to residents.
During a financial conference, Felicity Mabaso, the FSCA divisional executive, revealed that the regulator received a total of 355 license applications, with 262 still pending, according to a report from News24.
In response to this influx, the FSCA set a deadline of November 30 for exchanges and cryptocurrency platforms to submit license applications or face enforcement measures.
FSCA Commissioner Unathi Kamlana explained that the application processing is ongoing and being carried out gradually due to the high number of applications.
FSCA Uses South Africa’s Existing Regulations
The FSCA has chosen to utilize South Africa’s existing Financial Advisory and Intermediary Services Act (FAIS) to regulate the crypto sector.
According to Commissioner Kamlana, the FAIS provides a robust framework that covers crucial aspects of the crypto business, including user protections and enforcement actions when necessary.
However, Kamlana acknowledges the possibility of future adjustments.
“As we license and supervise, we will discover that perhaps there are gaps that cannot be closed by the existing regulatory framework, the FAIS Act. And we might need to build on that as we discover what those are.”
UPDATE: South Africa has started issuing crypto licenses, with @LunoGlobal and @zignaly among the first recipients. pic.twitter.com/miaR5op4FY
— ARK Mining (@ARKMining_) April 11, 2024
While specific details about the approved companies have not been disclosed, it is expected that the licensed entities include crypto exchanges and firms offering custody services.
Regulatory oversight will also extend to crypto brokerage firms and payment processors involved in cryptocurrency transactions.
South Africa Considers Creating New Regulatory Framework
South Africa has been actively considering the creation of a new regulatory framework for the crypto industry since 2021.
In 2021, the FSCA published a paper highlighting that crypto assets will be brought into the South African regulatory purview in a “phased and structured manner.”
Although the framework was initially expected to be completed by the end of 2022, the South African Reserve Bank (SARB) has already declared cryptocurrencies as financial assets rather than currencies.
The FSCA aligns with this classification, stating that digital assets should be treated as financial products.
South Africa’s approach towards cryptocurrencies has become more proactive as adoption gradually increases.
A survey conducted in 2017 revealed that 47% of South Africans had either invested in cryptocurrencies or expressed an interest in doing so.
Additionally, Bitcoin wallet downloads in the country experienced a 100% increase in the same year. In 2020, crypto exchange Luno reported that South Africa had the third-highest level of crypto ownership worldwide, reaching 13%.
Meanwhile, as crypto adoption continues to rise, South African companies are actively embracing cryptocurrencies.
Stitch, a South African payments infrastructure firm, introduced “Pay with Crypto” last year, enabling customers to use cryptocurrencies for purchases.
Paycorp, another company, developed the CryptoExpress app, allowing individuals to withdraw crypto in South African Rands at over 3,000 ATMs.
Last week, cryptocurrency exchange Luno became one of the first firms to receive a license from the FSCA in South Africa, allowing the exchange to operate as a financial services provider in the country.
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