South Africa Inches Closer to Issuing First Crypto Licenses: A Milestone for Regulation
South Africa’s crypto community stands on the cusp of a significant moment as the Financial Sector Conduct Authority (FSCA) prepares to issue the first financial service provider (FSP) licenses to crypto companies. This move, confirmed by Gerhard Van Deventer, head of divisional enforcement at the FSCA, aims to bolster user protection as crypto adoption in the country soars, with nearly 10% of the population now using cryptocurrencies like Bitcoin (BTC).
Key Developments:
- Over 145 applications received: Contrary to the previously reported 128 applications, Deventer revealed 145 were submitted, highlighting the immense interest in regulated crypto services.
- First licenses imminent: 50 applications were reviewed in December, with decisions expected “in the next few weeks.”
- Phased review: The remaining applications will be assessed in two stages: 22 on February 13th, 2024, and the final 14 on March 12th, 2024.
- Conditional operations: Companies that applied before the deadline can continue operating “under certain conditions,” adhering to FSCA’s codes of conduct for client and public protection.
- Some applications withdrawn: Around 20 applications were withdrawn, primarily due to a lack of required personnel, regulatory costs, or crypto not being their core business.
Context and Impact:
- This development follows the FSCA’s declaration of crypto assets as financial products in October 2022, necessitating licensing for digital asset exchanges.
- Regulatory clarity is attracting mainstream attention, exemplified by the recent Triple-A and Paycorp partnership enabling in-app cash withdrawals from ATMs.
- Licenses are expected to boost trust, unlock infrastructure access, and foster innovation within the South African crypto space.
While excitement prevails, some concerns linger regarding potential delays or the impact on smaller players. Nevertheless, South Africa’s move towards licensed crypto services marks a significant step towards a more secure and regulated future for the industry.
