In a significant move for the cryptocurrency sector in South Africa, the Financial Sector Conduct Authority (FSCA) has recently approved 59 out of 493 license applications from various cryptocurrency platforms. These platforms are keen on operating within the country’s burgeoning digital finance landscape. The approval process highlights a rigorous vetting mechanism, with only 199 applications completed fully, leaving 262 still under review.
The FSCA’s swift regulatory adaptations are in response to the overwhelming interest and participation in the crypto market, evidenced by the substantial number of applications. This robust influx led the authorities to set a deadline of November 30th for all crypto exchanges and digital platforms to submit their permit applications or risk facing legal repercussions.
This regulatory milestone is part of a broader effort to incorporate the crypto sector within the FAIS (Financial Advisory and Intermediary Services) regime, aimed at ensuring rigorous monitoring and compliance. The emphasis has been particularly strong on consumer protection, a pivotal aspect of the FSCA’s mandate. The regulatory framework is designed to safeguard users by integrating core elements of consumer rights and safety, especially significant in an industry where risk is inherently high.
Moreover, the FSCA’s oversight is not limited to exchanges but extends to various crypto-related entities, including storage services, brokerage firms, and payment processors. These entities will now operate under a standardized set of rules that aim to stabilize the market and protect consumer interests.
The discussions and steps toward a regulated crypto framework started gaining traction around 2021, when the FSCA drafted a detailed phase-by-phase plan for cryptocurrency integration into South Africa’s financial system. Although cryptocurrencies are not recognized as a national currency by the South African Reserve Bank (SARB), they are acknowledged as financial assets, which necessitates a formal and structured regulatory approach.
The popularity of cryptocurrencies in South Africa has been growing steadily. A survey conducted in 2017 indicated that nearly half of the population either invested in cryptocurrencies or showed interest in investing. This interest manifested into a significant surge in cryptocurrency activities, with the country achieving a high ranking in terms of global cryptocurrency ownership according to data from crypto exchange Luno in 2020.
Local commercial ventures are increasingly incorporating crypto transactions into their business models. An example is Sitch, a native payments infrastructure company, which integrated a “Pay with Crypto” feature last year, allowing consumers to make purchases using cryptocurrencies.
This burgeoning interest and the formal recognition by regulatory bodies highlight South Africa’s progressive stance towards embracing digital currencies. As the FSCA continues to refine its regulatory framework, the future of cryptocurrency in South Africa looks promising, with potential to significantly influence the broader financial landscape.
