Crypto Assets & Products Shall be Treated As Financial Products, Says South African Regulator
Crypto Assets along with crypto products are to be treated as “financial products” in South Africa. Draft regulations are in place and pending approval.
Financial Advisory & Intermediary Services (FAIS) of South Africa had recently prepared a draft regulation regarding crypto currencies. The draft regulations had been prepared to bring cryptocurrencies and assets into regulatory framework of FAIS. It was announced by FAIS that the regulator will treat crypto assets and products as “financial products” and not as “securities”.
The regulator further apprised that any person intending to render crypto trading services will need to register with FAIS. Authorization will be granted to applicants by FAIS under FAIS Act to operate as provider of financial services. This meant that the crypto service provider will not be required to register its crypto products with the regulator. In addition, the products offered by the crypto service provider shall not be treated as “securities”.
Later on Financial Sector Conduct Authority (FSCA) also clarified the intent and purpose of the new law. It was also told by FSCA that the law would be applicable upon crypto traders, advisers, brokers, exchanges and managers.
It had been a complicated issue worldwide where various regulators treat cryptocurrencies differently. For example any Initial Coin Offering (ICO) had been treated as “securities” by the US Regulator. Resultantly, issues arose between the coin provider and the US Regulator. In many cases US Department of Justice had to be involved which decided mostly in favour of the US Regulator. The ruling rendered by the Court had also treated crypto by-products as “securities” and fines were imposed upon crypto-exchanges.
Thereafter, back in US every ICO and crypto by-products had been treated as “securities”. This created implications even for the largest crypto-exchanges of the world. For instance crypto by-products offered by OKEx in US were treated as securities. However in countries such as UK and Singapore they were treated as “financial products”.
Meanwhile, the South African regulator also informed that there could be further amendments in the law. It was told that the matter of disclosure of information by consumers may be considered at a later stage. However, though the draft regulation had been prepared but it seeks comments and thereafter approval from the Government.
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