South Africa has sternly asked that all cryptocurrency exchanges currently operating within the country’s ambit get licensed before the year runs out. The warning was issued by the country’s financial regulator—the Financial Sector Conduct Authority (FSCA), South Africa’s financial watchdog.
Some weeks back, TechNext reported about the new licensing requirement for crypto exchanges in the country. According to the regulator, this became necessary following the mayhem caused by several crypto scandals that have rocked the country.
“The license allows these crypto firms to operate legally within the framework of operation provided by South Africa’s FSCA. Following the mayhem rooted at the heart of several crypto scandals, leaving many unprotected users with anguishing regrets, major global regulators resolved to establish regulations that would protect customers from crypto’s ruckus.”FSCA
The regulator confirmed that over 20 license applications have been submitted since the announcement was made. In an interview, FSCA Commissioner, Unathi Kamlana said that the association projects that more applications will be submitted before the stated deadline for applications, which is November 30, 2023.
Cryptocurrency exchanges that hesitate and fail to get the license after the deadline will be faced with punitive measures. According to FSCA Commissioner Unathi Kamlana, any crypto exchange that operates without a license after the agreed deadline could face “enforcement action”. Beyond getting fined, the exchange could be told to shut down completely and cease operation anywhere in the country.
In an interview with Bloomberg, he said the association is big on this because crypto trading services provided by platforms without a license can bring potential harm to South Africans who are their customers. As one of the core centers for the majority of the cryptocurrency platforms in Africa, SA understands the implications of having an unregulated space for cryptocurrency exchanges.
Thus, to ensure that South Africans are safe while using these cryptocurrency platforms, the need for a license has been established. This licensing requirement shows crystal clear how SA is adamant about taking the right steps in its fast-evolving crypto market.
What will happen if crypto exchanges fail to apply for the license
Failure to obtain the license could attract severe repercussions. If a crypto exchange fails to register and continues to operate after the November deadline. its operators might face a fine of up to 10 million South African rands ($510,000), or up to ten years in prison, or both, according to the announcement.
South Africa is home to numerous prominent crypto exchanges, including Binance, the Digital Currency Group-owned Luno, and Pantera Capital-backed VALR. These companies must obtain licenses before the deadline. South Africa witnessed several of the world’s largest crypto frauds, which cost investors billions of dollars.
The FSCA is collaborating on crypto supervision with an “inter-governmental fintech working group” comprised of financial regulators and policymakers from throughout the country, including the National Treasury and the South African Reserve Bank.
Crypto regulation across the globe
In the last couple of months, countries around the world have begun to pay stringent attention to the regulation of their respective crypto markets after the tumultuous period suffered last year.
Following the crypto epidemic that caused a number of crashes and bankruptcy filings last year, regulators and policymakers have agreed to tighten rules for the crypto sector. The fall of FTX heightened scrutiny of cryptocurrency exchanges and firms.
This is why it is no surprise that South Africa is following a similar path. The fight to ensure the crypto market is safe is on, and every forward-thinking cryptocurrency exchange knows they must adhere to these regulations to survive.
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