South Africa’s financial regulator, the FSCA, has given its approval to 59 license applications from cryptocurrency facilities looking to serve local residents. Out of the 493 license applications received by the FSCA, only 199 were complete, leaving 262 applications pending.
Due to the high volume of applications, the FSCA’s governing authority has set a deadline of November 30th for crypto exchanges and digital platforms to submit their permit applications or face legal consequences.
The processing of FSCA applications is currently ongoing to meet the high demand. The FSCA will bring the crypto sector under the FAIS regime to monitor and regulate its operations. The regulations aim to protect consumers and ensure proper regulation, with strong actions taken against any risks to consumers. While the specific details of the authorized companies have not been disclosed, they will include crypto platforms and firms offering storage services. The FSCA will oversee crypto brokerage firms and payment processors involved in cryptocurrency transactions, in compliance with the regulations mentioned above.
Crypto regulations have been a topic of discussion in South Africa since 2021, with efforts underway to establish a comprehensive framework for the industry. The FSCA released a paper in 2021 outlining a phased approach to dealing with crypto assets.
Although the cryptocurrency framework is set to be completed by the end of 2022, the South African Reserve Bank (SARB) recognizes cryptocurrencies as financial assets rather than national currency. The FSCA follows this classification and treats digital assets as financial items. South Africa’s approach to cryptocurrencies as a nation is becoming more practical as adoption increases.
A survey conducted in 2017 revealed that approximately 47% of the South African population either invested in or aspired to invest in cryptocurrencies. Additionally, the country’s share of Google Bitcoin wallet downloads increased by 100% in two years. In 2020, crypto exchange Luno reported that South Africa had the third-highest level of crypto ownership among all nations, with 13%.
Furthermore, commercial entities in South Africa, such as Sitch, a native payments infrastructure firm, have actively embraced cryptocurrencies. Sitch introduced cryptocurrency payments (“Pay with Crypto”) to its product lineup last year, allowing customers to use cryptocurrencies for purchases.