Regulated Financial Institutions Seeking Crypto Licenses in South Africa
According to Tarris Arnold, a business development manager at crypto exchange Luno, most of the entities applying for licenses to offer crypto products in South Africa are regulated financial institutions. This suggests that these institutions are looking to incorporate crypto into their product offerings. Only a few applications have been received from non-licensed financial service providers by the country’s financial sector watchdog, the Financial Sector Conduct Authority (FSCA). Out of the 93 applications received by November 30th, 73 of them are from accountable institutions already registered with South Africa’s Financial Intelligence Centre.
Interest in Crypto Assets by Regulated Institutions
Tarris Arnold points out that even financial services companies that may not believe in the fundamental value of crypto or its use cases are still interested in the volatility associated with crypto assets. This volatility can lead to greater profit margins, and crypto assets provide some mitigation for investments in traditional markets as they are non-correlating assets. As the crypto industry becomes regulated, institutional investors like pension funds are likely to start investing in digital assets.
Hot Take: Growing Interest in Crypto from Regulated Financial Institutions in South Africa
About 73 of the 93 applicants seeking crypto licenses in South Africa are already registered as accountable institutions. This indicates that regulated financial institutions are interested in incorporating crypto into their product offerings. Financial services companies are attracted to the volatility of crypto assets, which can result in higher profits. In addition, crypto assets provide some mitigation for investments in traditional markets. As the crypto industry becomes regulated, it is expected that institutional investors, including pension funds, will enter the market and invest in digital assets.
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