South Africa Makes History as First African Country to License Crypto Exchanges
In a groundbreaking move, South Africa’s Financial Sector Conduct Authority (FSCA) has approved 59 license applications from cryptocurrency platforms, making it the first African country to regulate digital assets in such a manner. This significant step comes after the introduction of a new framework last year, with the FSCA receiving a total of 300 applications since then.
FSCA Commissioner Unathi Kamlana revealed that due to the high volume of applications, the agency has been processing them in phases. Companies that were denied licenses have the option to 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.
In South Africa, companies had until June 1 to apply for licenses with the FSCA in order to continue their crypto operations. The decision to treat crypto as a financial product was made in 2022, with plans to regulate the sector under the Financial Advisory and Intermediary Services Act (FAIS). Discussions are ongoing about whether a stablecoin regime is necessary to further regulate the industry.
Currently, the FSCA is processing 262 applications from crypto exchanges out of a total of 355 applicants. The 59 approvals granted on March 12 mark 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.
This move by South Africa sets a precedent for other African countries looking to regulate the burgeoning crypto industry. With the approval of these licenses, the country is taking a proactive approach to ensure the integrity of the market and protect consumers.
