128 crypto exchanges have applied for licenses in South Africa- FSCA

Temitope Akintade
South Africa: 128 crypto exchanges have applied for license - FSCA

The South African Financial Sector Conduct Authority (FSCA) has announced that as of today, November 30, it has received 128 applications for crypto asset service provider licenses. This announcement was made during a presentation to give an update on the licensing of cryptocurrency services in South Africa.

Recall that earlier in June, South Africa reportedly became the first country on the continent to require crypto exchanges to be licensed. South Africa’s financial regulator, the FSCA, announced that all crypto exchanges in the country will be required to obtain licenses by the end of 2023.

Today is the last day for crypto service providers in the country to apply for the license and according to the briefing by the agency, FSCA had received 128 applications as of November 30, 2023.

FSCA instructs South African crypto service providers to obtain licenses

In June, the FSCA mandated digital asset exchanges to be licensed by the end of the year, in a move reportedly aimed at protecting investors. The financial regulator Commissioner Unathi Kamlana gave the exchanges until November 30 (today) to secure the license.

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In July, Unathi Kamlana stated that the agency had received approximately 20 license applications since its opening and expected more before the November 30 deadline, per a Bloomberg report.

Also, Kamlana mentioned that if crypto exchanges continue to operate without a license after the deadline, the regulator intends to take “enforcement action,” which may involve fines or the closure of non-compliant firms. 

South Africa’s Crypto Firms must now apply for registration to avoid getting fined 

Additionally, the Bloomberg report quoted Kamlana as saying that introducing a regulatory framework for crypto products is a sensible approach due to the potential risk of serious harm to financial customers. Kamlana also expressed the need for time to determine the effectiveness of the measures and assured ongoing collaboration with the industry to refine and implement necessary changes.

Update on license registration 

Today is the last day for already-operating providers to submit their applications. Of the total applications received, the regulator says nineteen applications were withdrawn due to a lack of experience and appropriate operational policies and procedures. According to a report by Mybroadband, 74 applications currently remain under consideration for the FSCA. 

Among the 74, 36 completed assessments would be presented at the December 12 Licensing Executive Committee meeting, 22 applications are pending for various reasons to be presented at the February 13, 2024 Licensing Executive Committee meeting, 14 applications with analysis that are yet to begin will be presented at the March 12 2024 Licensing Executive Committee meeting, while 2 applications remain undisclosed

According to the FSCA, it considered several criteria in the process of analysing each application. The yardsticks include the criticality of market services (if they provide multiple services) and whether they offer market support services.

Also, the regulator says it evaluated applicants’ operational policies and procedures, including KYC (Know-Your-Customer) compliance, data protection, cyber risk management, conflict of interest management, complaints handling, and credit counterparty risk management.

Crypto regulation in South Africa 

South Africa has been paying a great deal of attention to blockchain technology and its offerings recently. Recall that two weeks ago, we reported how the country joined a list of 47 other countries that have committed to adopting a taxation standard enabling them to go after individuals and businesses that fail to report earnings and pay taxes on crypto, NFT and other digital assets by 2027. 

Cyril Ramaphosa
President Cyril Ramaphosa

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According to a statement, the South African Revenue Service (SARS) welcomed the standard developed by the Organisation for Economic Cooperation and Development (OECD). This new standard allows the automatic exchange of information related to the ‘crypto-asset’ tax. It falls under the OECD’s mandate by the G20 to develop a global framework for easy and automated exchange of tax-relevant information to curb tax evasion.

With these developments, it is now apparent that South Africa is trying to edge its African rivals like Nigeria and Kenya to regulate, manage, and harness the blockchain for national development.

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