South Africa’s market watchdog, The Financial Sector Conduct Authority or FSCA would mandate that trading platforms for digital assets operate under a license by the end of the year, failing which they risk closure or fines.
Unathi Kamlana, the commissioner of the FSCA, revealed the information in an interview, stating that they have received roughly 20 license applications since it opened a few weeks ago and is expecting more before the deadline of November 30.
Kamlana said firms that continued to operate without a license after the deadline run the possibility of facing “enforcement action” by the regulator. He also didn’t rule out the options of nonadherent firms shutting down or being penalized.
There is potentially serious harm to financial customers when using crypto products, and therefore it makes sense for us to introduce the regulatory framework. Time will tell the effectiveness of our measures, and we will continue to work together with the industry to refine and make changes where and if necessary.
While there is no doubt that the action is a reflection of recent regulatory and policymaking initiatives around the globe.
It should be noted that South Africa has witnessed the emergence of some of the most well-known frauds in the world, such as the theft of 70,000 Bitcoin in 2021 from the Cajee brothers’ Africrypt platform and the phony MLM scheme Mirror Trading International Proprietary.
South Africa’s FSCA Deemed Cryptocurrencies As “Digital Representations Of Value”
Financial literacy programs and public awareness campaigns on cryptocurrency products are among the steps being taken to protect consumers, Kamlana stated in Pretoria. “You must think twice before exposing yourself to it,” he continued, “as it is an area where you can lose quite a bit of money.”
After deeming cryptocurrencies as “digital representations of value,” FSCA recognized them as financial products that can be used in trade for payments and investment on the 19th of October 2022.
Since then, the country’s top agency has been actively trying to regulate cryptocurrencies and fintech, collaborating with an “inter-governmental fintech working group” such as National Treasury and the South African Reserve Bank.
Exactly a year ago, South Africa’s Central Bank [SARB] decided to bring crypto under its regulatory ambit in a complete reversal of its earlier policy that kept these asset classes outside the scope of a legal framework, TronWeekly reported.