South Africa’s Financial Regulator Approves Crypto Licenses
South Africa’s Financial Sector Conduct Authority (FSCA) has recently given the green light to 59 cryptocurrency platforms to offer their services to residents of the country. The regulatory body received a total of 355 license applications, with 262 still pending, showing a significant interest in the crypto space.
FSCA’s Response to License Applications
- The FSCA has set a deadline of November 30 for exchanges and crypto platforms to submit their license applications to avoid enforcement measures.
- Commissioner Unathi Kamlana mentioned that the application processing is ongoing, albeit gradually, due to the high number of applications.
FSCA Utilizes Existing Regulations for Oversight
The FSCA has opted to use South Africa’s Financial Advisory and Intermediary Services Act (FAIS) to regulate the crypto sector. This regulatory framework covers essential aspects of the crypto business, including user protections and enforcement actions when needed. Commissioner Kamlana acknowledged the potential need for future adjustments to the existing regulatory framework.
“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.”
South Africa’s Cryptocurrency Regulatory Landscape
South Africa is deliberating creating a new regulatory framework for crypto assets to be integrated gradually and structurally into the existing financial system. The South African Reserve Bank (SARB) has classified cryptocurrencies as financial assets rather than currencies, a perspective supported by the FSCA that digital assets should be treated as financial products.
Rise in Crypto Adoption in South Africa
- A 2017 survey revealed that 47% of South Africans had either invested in cryptocurrencies or expressed interest in doing so, showcasing a growing interest in digital assets.
- Bitcoin wallet downloads in the country grew by 100% in the same year, while in 2020, South Africa ranked third globally in terms of crypto ownership, reaching a 13% adoption rate.
Corporate Adoption of Cryptocurrencies in South Africa
- South African companies like Stitch and Paycorp have introduced services that allow customers to use cryptocurrencies for purchases and withdraw crypto in South African Rands at ATMs.
- Last week, cryptocurrency exchange Luno became one of the first firms to receive a license from the FSCA to operate as a financial services provider in South Africa, signaling a proactive approach by local businesses towards crypto.
Hot Take: South Africa Embraces Cryptocurrency Regulation
South Africa’s steps towards regulating the cryptocurrency industry demonstrate a proactive stance towards integrating digital assets into the existing financial landscape. With a surge in crypto adoption among residents and businesses, the country is paving the way for a structured and phased approach to managing cryptocurrencies.
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