Key Takeaways
- South Africa is considered as the first African country to license crypto exchanges
- Since the introduction of its new framework last year, the FSCA has received a total of 300 applications.
South Africa’s Financial Sector Conduct Authority (FSCA) has given the green light to 59 license applications from cryptocurrency platforms, marking a significant step in regulating digital assets in the country. Since the introduction of its new framework last year, the FSCA has received a total of 300 applications.
FSCA Commissioner Unathi Kamlana explained that due to the high volume of applications, the agency has been processing them in phases. Kamlana mentioned in an interview with Bloomberg that companies denied licenses could seek reconsideration under existing legislation.
The regulatory pressure escalated in July when the FSCA commissioner warned that crypto exchanges operating without licenses after the November deadline would face enforcement actions, including fines and closure. By December, the FSCA had received 128 applications, with 72 slated for consideration between December and March 14.
In South Africa, companies wishing to continue their crypto operations had to apply for licenses with the FSCA by June 1. The decision to treat crypto as a financial product came in 2022, with plans to regulate the sector under the Financial Advisory and Intermediary Services Act (FAIS). While the FAIS act aims to ensure honesty and integrity among companies and protect consumers, discussions are ongoing about whether a stablecoin regime is necessary.
Regarding the licensing process, the FSCA is currently processing 262 applications from crypto exchanges out of a total of 355 applicants. The 59 approvals granted on March 12 represent a significant milestone in bringing regulatory clarity to the crypto industry in South Africa.
Once licensed, these crypto companies will operate under the FAIS act, providing new customer protections and enabling regulators to take enforcement actions. The South African Reserve Bank (SARB) Financial Surveillance Department will oversee supervision to ensure compliance.
