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South Africa’s Regulator Approves 59 Crypto Licences: Report

According to a report from Reuters, citing an official from the Financial Sector Conduct Authority (FSCA), South Africa’s regulator, a total of 59 operating licenses for cryptocurrency exchanges have been approved.

Out of over 300 crypto providers in South Africa seeking permits, only 59 have met the regulatory requirements to operate legally. Under South African law, digital-asset exchanges must obtain permits to function within the country.

In 2022, the FSCA categorized cryptocurrency assets as financial products, emphasizing the need for regulation to safeguard financial consumers against risks such as money laundering and terrorism financing. Exchanges were given until November 30 to apply for licenses, after which non-compliant firms faced the risk of enforcement action.

“We are currently processing those licensing applications in a phased manner due to the volume,” stated FSCA Commissioner Unathi Kamlana in a recent interview with Bloomberg.

FSCA’s Framework for Regulating Crypto Assets

In 2021, the Financial Sector Conduct Authority (FSCA) released a paper outlining plans to integrate crypto assets into South Africa’s regulatory framework in a gradual and systematic manner.

The paper outlined a roadmap for establishing regulations governing crypto assets by overseeing Crypto Asset Service Providers (CASPs) operating in South Africa.

“Crypto assets remain highly volatile and inherently risky due to their decentralized and disintermediated nature,” stated an excerpt from an FSCA newsletter in 2021. “Their decentralized structure poses challenges in terms of accountability in case of mishaps, as there is no central intermediary, issuer, or ledger keeper. This lack of centralized authority leaves consumers with limited avenues for recourse in the event of user errors, such as sending Bitcoin to an Ethereum address.”

The FSCA further elucidated that with the rising interest from retail investors in crypto assets, there has been a noticeable surge in instances of consumer abuse, fraud, and market misconduct, both domestically and internationally. Recent cases highlighted in the media underscore the imperative for South African authorities, primarily the FSCA, to address and combat the growing trend of market abuse disguised within the realm of crypto assets.

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What we write about

I want to save money. Will cryptocurrency work?

Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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