South Africa’s cryptocurrency industry advanced significantly when the Financial Sector Conduct Authority (FSCA) approved licenses for 59 platforms. This decision signals a transition towards a more structured crypto environment in the nation. However, it also underscores the ongoing process of establishing comprehensive regulations.
The FSCA received 355 license applications, reflecting the growing interest in crypto services among South Africans. Nevertheless, with only 59 approvals granted so far, a substantial number (262) remain pending. FSCA Commissioner Unathi Kamlana attributes this to the rigorous evaluation process required due to the high volume of applications.
FSCA Adopts FAIS for Crypto Oversight
The FSCA has decided to use the current Financial Advisory and Intermediary Services Act (FAIS) to oversee the cryptocurrency market. According to Commissioner Kamlana, FAIS offers robust safeguards for users and enables enforcement actions. However, she recognizes that potential adjustments may be required in the future:
“As we license and supervise, we will discover that perhaps there are gaps that cannot be closed by the existing regulatory framework, the FAIS Act. And we might need to build on that as we discover what those are.”
South Africa plans to oversee crypto firms, which will likely cover exchanges, custody providers, brokers, and payment processors dealing in cryptocurrencies. This regulatory approach aims to foster transparency and create a safe environment within the nation’s crypto sector, although specifics remain undisclosed regarding approved companies.
South Africa’s cryptocurrency laws have developed alongside global trends and domestic adoption. Classifying digital assets as financial holdings, the South African Reserve Bank’s stance matches the Financial Sector Conduct Authority’s view, which regards cryptocurrencies as financial products conforming to related regulations.
FSCA Awards Cryptocurrency License to Luno Exchange
Surveys show many South Africans show keen interest in cryptocurrencies. Research in 2017 found almost half (47%) had invested or wished to invest in crypto, with Bitcoin wallet downloads doubling that year. Furthermore, a 2020 report ranked South Africa third globally for crypto ownership, reaching 13% of the population. These findings demonstrate a robust South African appetite for digital currencies.
This enthusiasm extends beyond individual investment. South African companies are actively integrating crypto into their offerings. Stitch, a payments infrastructure firm, introduced a “Pay with Crypto” option last year, while Paycorp’s CryptoExpress app allows users to withdraw crypto in South African Rand at ATMs.
Last week, cryptocurrency exchange Luno became one of the first recipients of an FSCA license, allowing it to operate as a licensed financial service provider. This milestone paves the way for other platforms to navigate the regulatory process and establish themselves in the newly formalized South African crypto landscape.
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