The Financial Sector Conduct Authority (FSCA) of South Africa on Wednesday, 19th October 2022, declared crypto as a financial product in South Africa. According to the report which went into force in the Green Gazette, this move could be a step towards full regulation. Following the announcement, the definition of crypto assets has been included in an updated Financial Advisory and Financial Intermediary Services Act (FAIS) document.
As contained in the FSCA notice, “crypto asset is a digital representation of value that applies cryptographic techniques and uses distributed ledger, also it can be electronically traded, transferred and stored but is not issued by a central bank.”
Building a conversation on the publication, Farzam Ehsani, CEO of VALR, a crypto exchange in South Africa, said the declaration was due to the “mounting risk in the crypto asset environment” and seemingly to comply with a Financial Action Task Force (FATF) deadline for remediation of recommendations for South Africa.
He added that some exceptions to the declaration include Miners, Node operators, NFTs, and NFT platforms (at this stage).
The CEO said that this declaration provides regulatory clarity and will allow large, traditional financial institutions in South Africa to provide crypto products and services.
In line with providing regulatory clarity, VALR CPO Budi Sudhakaran said customers can now be exposed to new assets class, and VALR will apply for a license as a Crypto Asset Service Provider (CASP) on 1st June 2023.
South Africa’s Activity Towards Crypto Adoption Before the Announcement
- In November 2020, a South African draft on crypto assets was published.
- In June 2021, a national working group created the roadmap for a regulatory framework.
- In February 2022, South Africa’s Nation Treasury made public its intention to make cryptocurrency a financial product.
- A report published by Chainalysis in September showed that South Africa ranked 30th in worldwide cryptocurrency adoption.
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