South Africa is gearing up plans to license around 60 cryptocurrency platforms by month’s end, a move that will position the country as a leader in Africa for digital asset regulation.
The Financial Sector Conduct Authority (FSCA) set a deadline of November 30 for exchanges to apply for licenses or face potential enforcement actions. Over 300 crypto asset providers have reportedly applied for licenses, according to FSCA commissioner Unathi Kamlana.
Speaking in an interview with Bloomberg, Kamlana said,
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“We are processing those licensing applications and we are doing so in a phased kind of manner given the numbers. If you wait for the Rolls-Royce kind of regulatory framework, you still have those risks anyway. 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, we might need to build on that as we discover what those are”.
The proposed license of crypto platforms in Nigeria is coming after the Financial Sector Conduct Authority (FSCA) in 2022 declared crypto assets as a financial product. This declaration was a pivotal moment, marking the start of a journey to develop the crypto industry within South Africa’s legal framework.
According to Brent Peterson, head of legal at Easy Crypto Ltd., he said the move was about safeguarding the average Joe on the street, offering protections that were previously unavailable due to the unregulated nature of crypto trading.
While South Africa had begun working on a tailored crypto framework in 2021 when it initiated the conversation on digital assets, the country aborted the plans when it labeled cryptocurrencies as financial products, bringing them under the purview of the Financial Advisory and Intermediary Services Act (FAIS).
Besides providing requirements for licensing crypto firms, the FAIS Act offers a range of customer protections and allows regulators to take action against non-compliant businesses.
The need for crypto regulation in South Africa was necessitated following the increased adoption and interest in cryptocurrencies within the country. Cryptocurrency adoption in South Africa has been one of the highest in the world, with a large percentage of the audience that would prefer to use their crypto to make payments,”
Licensing of these crypto platforms will not only provide legitimacy to these platforms but also enhance consumer protection and ensure compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations.
Overall, the licensing of the platforms in South Africa reflects a proactive approach by regulatory authorities to address the evolving landscape of digital finance and provide a conducive environment for the growth of the cryptocurrency industry in the country. In the meantime, stablecoins are exempted from the classification as the country seeks to implement a policy change to include them in its definition of crypto assets.