South Africa has taken a significant step toward regulating its growing cryptocurrency industry. The Financial Sector Conduct Authority (FSCA), the country’s financial watchdog, has granted licenses to 75 crypto asset service providers (CASPs) so far, out of 374 applications received.
TLDR
- South Africa’s Financial Sector Conduct Authority (FSCA) has granted licenses to 75 crypto asset service providers (CASPs) so far, out of 374 applications received.
- The licenses were issued under the existing Financial Advisory and Intermediary Services (FAIS) Act, not a new crypto-specific regulation.
- The FSCA clarified that it does not consider any cryptocurrency as legal tender, and its licensing powers are limited to overseeing financial services related to crypto assets.
- Notable licensed CASPs include Luno, VALR, and Altcoin Trader, while Binance did not make the list.
- The licensing process aims to bring transparency and create a safe environment within South Africa’s crypto sector, though the specifics of approved companies remain undisclosed.
The licenses were issued under the existing Financial Advisory and Intermediary Services (FAIS) Act, which the FSCA has decided to use for overseeing the cryptocurrency market. This decision was made in the absence of a dedicated crypto-specific regulation, with the FSCA acknowledging that the FAIS Act may require adjustments in the future as the industry evolves.
In a recent statement, the FSCA clarified the scope of its licensing powers, emphasizing that it does not consider any cryptocurrency as legal tender. “The public is reminded that the FSCA’s licensing powers are limited to the authorization and supervision of CASPs only insofar as they render financial services related to crypto assets,” the regulator stated.
The FSCA’s definition of crypto assets aligns with the general understanding in the industry. It considers crypto assets as digital representations of value that are not issued by a central bank, can be traded, transferred, or stored electronically, apply cryptographic techniques, and use distributed ledger technology.
🇿🇦LIST | Here are the 75 Crypto Firms Granted CASP Licenses by South African Financial Watchdog, FSCA
“374 licence applications have been received to date. The FSCA will continue to provide regular updates as these applications are processed and approved.” – FSCA… pic.twitter.com/GnStpzogj7
— BitKE (@BitcoinKE) April 23, 2024
While the FSCA did not disclose the names of all approved CASPs, several notable South African crypto exchanges were among the licensees. Luno, one of the early recipients, became the first licensed financial service provider in the country’s newly formalized crypto landscape. Other licensed entities include VALR and Altcoin Trader.
Notably absent from the list was Binance, one of the world’s largest cryptocurrency exchanges. The exchange had previously announced plans to terminate some services in South Africa to comply with regulations, following a warning from the FSCA about the risks associated with engaging with the “Binance Group.”
The licensing process, which began on June 1, 2023, aims to bring transparency and create a safe environment within South Africa’s crypto sector. By granting licenses to CASPs, the FSCA seeks to establish a structured framework for the industry and provide robust safeguards for users.
However, the journey towards comprehensive crypto regulation in South Africa is far from over. With only 75 licenses granted so far, a substantial number of applications (262) remain pending. FSCA Commissioner Unathi Kamlana attributed the slow pace to the rigorous evaluation process required due to the high volume of applications.
South Africa’s approach to crypto regulation mirrors global trends and domestic adoption. The South African Reserve Bank’s stance on classifying digital assets as financial holdings aligns with the FSCA’s view, which regards cryptocurrencies as financial products subject to related regulations.
The country’s appetite for cryptocurrencies has been growing steadily. A 2017 survey found that almost half (47%) of South Africans had invested or wished to invest in crypto, while a 2020 report ranked South Africa third globally for crypto ownership, reaching 13% of the population.
This enthusiasm extends beyond individual investment, with South African companies 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.
