South Africa is reportedly gearing up to issue its inaugural set of licenses for financial services providers (FSPs) catering to the cryptocurrency sector. Gerhard van Deventer, who serves as the head of enforcement at South Africa’s Financial Sector Conduct Authority (FSCA), confirmed this development while speaking on a Moneyweb Crypto podcast.
Van Deventer emphasized that this move is aimed at curbing cryptocurrency-related scams, stating, “This measure will facilitate the early detection and shutdown of cryptocurrency scammers.”
This development comes at an opportune time, as research conducted by Sumsub reveals that fraud cases within South Africa’s cryptocurrency industry surged by 25% during the final quarter of 2023.
Furthermore, Van Deventer disclosed that the FSCA has received applications from 128 cryptocurrency firms that are already operational. He explained that the regulator received an overwhelming response from cryptocurrency service providers between June 1 and November 30, 2023, following its October 2022 announcement classifying cryptocurrencies as financial products.
South Africans Cash Out Cryptos
The decision to grant crypto licenses comes at a pivotal moment when an increasing number of South Africans are embracing digital currency payments. According to recent data from the FSCA, approximately 10% or 6 million individuals in the country now hold cryptocurrencies.
Moreover, there has been a notable uptick in South Africans using cryptocurrency ATMs to withdraw cash throughout the nation. This trend is a result of a recent partnership between the global payment company Paycorp and Triple-A, enabling users to convert their cryptocurrencies into cash at over 3,000 ATMs in South Africa.
Local cryptocurrency service providers are eagerly anticipating the approval of crypto licenses for those who meet the criteria. Christo De Wit, the country manager for South Africa at Luno, expressed optimism about the regulatory direction, stating, “The requirement for licensing is a step in the right direction as it legitimizes the operations of cryptocurrency companies.”
Cedric Jeannot, CEO of neobank Be Mobile Africa, which introduced a pay-with-crypto option for its customers, believes that this move will contribute to the growth of South Africa’s cryptocurrency sector. He remarked, “By introducing licensing, the government is promoting proper regulation that positively serves the commercial interests of all parties within the ecosystem,” in a statement to a local publication.
