South Africa is poised to lead the way in cryptocurrency regulation by licensing approximately 60 digital-asset platforms by the end of the month, positioning itself as one of the first nations on the continent to mandate permits for crypto exchanges.
The Financial Sector Conduct Authority (FSCA) set a deadline of November 30 for exchanges to apply for licenses or face potential enforcement actions.
More than 300 crypto-asset providers have sought approvals, according to FSCA Commissioner Unathi Kamlana.
- “We are processing those licensing applications and we’re doing so in a phased kind of manner given the numbers,” Kamlana explained in interview with Bloomberg.
- Kamlana emphasized the effectiveness of the current law in addressing most regulatory gaps, stating, “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,” Kamlana noted. “And we might need to build on that as we discover what those are.”
This portends that, instead of creating a new regulatory framework for cryptocurrency operators, the regulator has opted to supervise these firms within the framework of the existing Financial Advisory and Intermediary Services Act.
This Act emphasizes the honesty, integrity, competency, and capability of all financial services providers, ensuring adherence to fit-and-proper standards.
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What you should know
Bitcoin, the world’s largest cryptocurrency, recently reached an all-time high of $73,664, driven by record-breaking inflows into US exchange-traded funds linked to the digital asset. Other cryptocurrencies, including Ether, have also experienced significant gains this year.
With crypto exchanges falling under the FAIS Act, consumers will benefit from recourse and protections that were previously unavailable. The regulator will have the authority to take enforcement action if operators breach any of the Act’s requirements.
Notable trading venues in Africa, such as Luno and VALR, have emerged from South Africa, while global platforms like Binance also operate in the country. Yellow Card Financial Inc., a pan-African cryptocurrency exchange, became the first company on the continent to secure a license when Botswana issued the permit in 2022.
