South Africa has recently announced a new requirement for all crypto exchanges operating in the country. They must obtain a license by the end of the year. This decision was made by the Financial Sector Conduct Authority FSCA, which serves as the financial regulatory body in South Africa.
The FSCA is actively involved in regulating crypto and fintech and collaborates with a government working group that includes key financial regulators and policymakers.
The importance of licensing crypto firms has become increasingly recognized worldwide, as it helps address the challenges associated with the collapse of such companies and the subsequent loss of funds for users.
South Africa, known as one of the most suitable destinations for Web3 firms, is now gearing up to implement regulations for crypto exchanges operating within its borders.
South Africa has been plagued by significant crypto scams, resulting in the loss of billions of dollars. Notable examples include the disappearance of 70,000 Bitcoin from Africrypt and the Mirror Trading International scheme in 2021.
According to Unathi Kamlana, the FSCA Commissioner, the commission has recently received 20 license applications from crypto firms. However, considering the number of crypto firms operating in the country, this means that approximately 30 other firms are yet to apply before the November deadline.
Kamlana further stated that if any crypto firms fail to obtain a license by the deadline, they will either be shut down or face fines based on the final decisions made by the FSCA.
Kamlana also voiced concerns about potential risks to financial customers linked to crypto products. He stressed the importance of establishing a regulatory framework to address these risks.
Only “time will tell the effectiveness of our measures, and we will continue collaborating with the industry to refine and make necessary changes.”
While South Africa seems to be leading the way on the continent in terms of creating a regulatory framework for the industry, Europe has also taken similar steps to prevent situations like FTX.
The European Commission introduced MiCA, its regulatory framework, which is anticipated to be used for controlling and regulating all crypto firms in the region.