South Africa begins licensing crypto exchanges as applications pile up
South Africa’s Financial Sector Conduct Authority (FSCA) has approved 59 license applications from cryptocurrency platforms, according to Reuters. They will be regulated under current law.
The FSCA has 262 licensing applications from crypto exchanges in processing, out of a total of 355 applicants, Reuters said, citing FSCA divisional executive Felicity Mabaso. The 59 approvals were granted on March 12. The crypto companies have applied under a deadline of Nov. 30, 2023, according to Bloomberg, and will be regulated under the Financial Advisory and Intermediary Services Act (FAIS).
The act will provide new customer protections and allow regulators to take enforcement actions. It authorizes the South African Reserve Bank (SARB) Financial Surveillance Department to conduct supervision. FSCA Commissioner Unathi Kamlana told Bloomberg:
“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 is reportedly the first African country to license crypto exchanges. It had considered creating a separate regulatory framework for crypto when it first began the regulatory process in 2021. Those plans were still in place in 2022, and the regulations were expected to be finalized that year. The SARB stated later that year that cryptocurrency would be declared to be a financial asset, rather than currency, in regulations due out in 2023. In the end, it was declared a financial product by the FSCA.
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In July, the FSCA commissioner reportedly said 20 applications had been received ahead of the November deadline and crypto exchanges operating without licenses after the deadline would be subject to enforcement actions such as fines and closure. In December, the FSCA said it had received 128 applications and 72 of them would be considered between December and March 14.
In February, the South African National Treasury said in its annual budget review that it would implement a policy change to include stablecoins in its definition of crypto assets.
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