South Africa: A Pioneer in Licensing Cryptocurrency Platforms Amidst African Continent
The African continent is on the brink of witnessing a groundbreaking milestone as South Africa gears up to license approximately 60 cryptocurrency platforms by the end of this month. This regulatory move places the nation at the forefront of requiring cryptocurrency exchanges to secure operating licenses, setting an example for other countries in the continent.
Over 300 Crypto Asset Providers Eyeing South Africa’s Green Light
With an overwhelming interest from over 300 crypto asset providers, the Financial Sector Conduct Authority (FSCA) in South Africa has imposed a strict deadline for applications. The hopeful applicants must submit their applications by November 30 to avoid any potential repercussions.
A Meticulous Regulatory Process
FSCA Commissioner Unathi Kamlana described the process as meticulous to ensure a structured review of the applications given the significant volume. Rather than establishing a specialized crypto regulatory framework, South Africa is opting to bring crypto exchanges under the existing Financial Advisory and Intermediary Services Act. This legislation sets high standards for honesty, integrity, and competency among financial services providers.
Crypto Assets Recognized as Financial Products
Last year, the FSCA took a decisive step towards regulating crypto assets by announcing that they would be considered financial products. This declaration marked the beginning of incorporating the crypto industry within South Africa’s legal framework. Brent Peterson, head of legal at Easy Crypto Ltd., explained that this move aimed to safeguard the average consumer by offering protections previously unavailable due to the unregulated nature of crypto trading.
The Necessity for Regulation: A Response to Significant Crypto Scams
Following two major crypto scams in South Africa, which resulted in the loss of billions of dollars, there was a pressing need for regulatory oversight as cryptocurrencies transitioned from the finance world’s periphery to the mainstream. The global call for regulation grew increasingly louder, prompting South Africa to institute a licensing period for crypto platforms, extending from June 1 to November 30, 2023. During this phase, platforms can continue operating but must comply with new regulatory checks.
South African Banks’ Reluctance Towards Crypto Platforms
One noteworthy consequence of the burgeoning crypto market has been the reluctance of South African banks to provide services to crypto platforms due to perceived risks. Coen Jonker, CEO of Tymebank, emphasized the need for clear guidelines and regulations in the industry. The consensus among stakeholders remains the same: clarity and regulation will benefit everyone, preventing millions of South Africans from engaging in crypto transactions in a “completely unregulated manner.”
Disclaimer: This content is for informational purposes only and should not be construed as investment advice. The crypto market remains highly volatile and subject to various risks.
