An official with South Africa’s financial industry regulator, the Financial Sector Conduct Authority (FSCA) has revealed that he expects the watchdog to make a decision on the fate of 50 crypto companies’ application for licenses, in the coming weeks.
According to reports from the South African press, Gerhard van Deventer, the head of enforcement at the FSCA, said in a podcast that out of the 90-plus applicants, 20 have since withdrawn.
Recall that in December, Technext reported that the FSCA announced that it had received 128 applications for crypto asset service provider licenses as of November 2023.
In June 2023, 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.
Latest update in January 2024
In a MoneywebCrypto Podcast, Gerhard van Deventer, the head of enforcement at the FSCA, said according to the latest statistics from the FSCA’s licensing division, 145 applications were received by the deadline of November 30, 2023.
Out of those 145 applications, 20 licence applications have been withdrawn while 50 were presented to the Authority’s licensing committee in December.
According to him, the results of the first batch of applications for crypto asset service provider licences will be seen in the next few weeks. For the 20 withdrawn applications, one of the reasons for this is that several applicants’ businesses were not primarily focused on crypto, but they were only exploiting an opportunity to add to their licence.
“Once that interaction starts with the FSCA in the application process, then reality kicks in of what is necessary to get this licence, which is fairly heavy on the entity. Then some of them decided that they will leave it for another day when they actually decide to get into crypto.” Gerhard Van Deventer said.
Also, some applicants “got stuck” on the requirement to have an appropriate key individual (KI). Van Deventer said a KI needs to have specific and relevant experience, qualifications, and skills.
“And there’s not a lot of that around if you take into account that crypto hasn’t been around for a long time. So, in those instances, those applicants have also indicated that they will look for a suitable KI and then apply again at a later stage.”
Van Deventer said that everybody who submitted applications, no matter the merit, is permitted to continue providing this type of financial service – subject to certain conditions –until they are informed of the outcome of their application.
“But what it really means, the important part, is that anybody who did not get a licence application in must stop immediately. They are not allowed to (operate) anymore, they will be doing unregistered business,” he said.
Crypto regulation in South Africa
Businesses providing crypto-asset financial services had until 30 November last year to submit their licence applications. Unlicensed entities were required to submit a comprehensive licence application, while licensed FSPs had to seek approval to include crypto assets in their existing licences.
After the November deadline, individuals who did not submit a licence application and who continue to offer crypto financial services are deemed to be engaging in unauthorised or unregistered business. This could have legal consequences, including fines, imprisonment, or both, according to the FSCA.
South Africa has been paying a great deal of attention to blockchain technology and its offerings recently. Recall that in November, 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.
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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