South Africa’s financial regulator has announced that crypto exchanges in the country will be required to obtain licenses by the end of the year.
According to FSCA Commissioner Unathi Kamlana, the Financial Sector Conduct Authority has received approximately 20 license applications since opening the process a few weeks ago. More applications are expected before the November 30 deadline as reported by My broad Band.
To enforce compliance, the regulator plans to take “enforcement action,” which may involve closing down or imposing fines on firms that continue to operate without a license after the deadline.
Kamlana stated that introducing a regulatory framework is necessary due to the potential serious harm to financial customers associated with crypto products. The effectiveness of these measures will be evaluated over time, and the FSCA remains committed to refining them in collaboration with the industry.
South Africa is the first country on the African continent to implement licensing requirements for digital asset exchanges. Notable trading venues such as Luno, owned by Barry Silbert’s Digital Currency Group, and Pantera-backed VALR have emerged from South Africa. Global platforms like Binance that operate in the country will also need to secure licenses.
Christo de Wit, the manager of Luno’s local unit, confirmed that the company had submitted its license application and is awaiting feedback from the FSCA.
Regulators and policymakers worldwide have been tightening rules governing the cryptocurrency sector, driven by the collapse of several companies, including the bankruptcy of Bahamas-based exchange FTX.
In South Africa, the country has experienced significant crypto scams in recent years, resulting in the loss of billions of dollars in investments. Notably, Africrypt, run by the Cajee brothers, vanished with 70,000 Bitcoin in 2021, and the fraudulent multilevel marketing scheme Mirror Trading International Proprietary also operated in the country.
The FSCA has been actively involved in regulating crypto and fintech through collaboration with an “inter-governmental fintech working group,” which includes major financial sector regulators and policymakers such as the National Treasury and the South African Reserve Bank.
While most of South Africa’s lenders currently do not provide banking services to crypto platforms due to associated risks, the central bank has urged them to reconsider in order to gain better visibility into the sector. Kamlana noted that being in the formal sector provides better transparency, and being controlled by a tightly regulated entity like a bank offers a sense of security.
Consumer protection measures include financial education and raising public awareness about cryptocurrency products, according to Kamlana.
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Photo: Facebook / @MyBroadband