SA Pioneers Africa’s Crypto Regulations As FSCA Licensed 50 Firms
In a recent report, the Financial Sector Conduct Authority (FSCA) of South Africa is set to grant about 50 digital assets service provider licenses to operate, making the country one of the frontrunners in crypto regulations in Africa. FSCA licensing aims at regulating crypto firms as well as protecting investors from challenges and risks associated with cryptocurrency innovation. More so, the report further showed that crypto-related scams have evolved in recent times to become social media schemes with unrealistic profit pledges.
According to the report, South Africa’s FSCA is preparing to grant about 50 crypto companies approval to operate in the area in the coming weeks. This new development reportedly positioned South Africa as the first nation in Africa to necessitate licenses for crypto exchanges, depicting a huge milestone towards adopting crypto innovation in the continent.
Furthermore, the South African Luno Country Manager, Christo De Wit, stated that the new legislation that mandates exchanges to obtain licenses is a right move in the right direction as it authenticates the operations of digital assets firms.
FSCA Mandates CASP License
In addition, the report revealed that about 145 firms had initially applied for the crypto assets service provider (CASP) license of which 20 later withdrew their applications. Concerning the withdrawals, Gerhard Van Deventer, FSCA’s head of enforcement, commented that the substantial fee required to obtain the CASP license as well as the inadequate number of experts caused the withdrawals. Nonetheless, the 50 applications remaining are said to be passing through a paramount stage as the licensing committee reviews them.
According to the report, the licensing mandate surfaced in June 2023 when FSCA obligated all digital assets firms operating in South Africa to obtain a CASP license within a six-month window. Van Deventer claimed that firms whose applications are still under review are allowed to continue with operations pending their approval or rejection to ease the tension building up between the period of submitting applications and the regulatory decision-making process.
Protecting Consumers And Punishing Non-Compliance Actions
Furthermore, the report pointed out that the licensing exercise serves as a crucial regulatory framework as well as a protective criterion for investors. More so, with the emergence of the new licenses, consumers were encouraged to only associate their business deals with crypto firms that are fully licensed and to consider firms without licenses as reg flags. Van Deventer also emphasized the significance of verifying the type of license crypto firms hold, as he urged customers to do thorough research when browsing a firm’s website.
In order to command uniform compliance from crypto firms, the FSCA set November 30, 2023 as the deadline date and firms that failed to submit their license application within or on the specified date were considered as non-compliant and liable to punishment determined by the authority. The penalties can vary from imposing fines to shutting down operations in the firms involved. These strict measures demonstrate the commitment of FSCA to maintain a compliant and secured digital assets landscape in the region.
Crypto Scam And Challenges Continue
Although the licensing exercise improves the regulator’s supervision over scams related to cryptocurrencies which is rampant in the area, Van Deventer advised that these scams might continue. Meanwhile, the FSCA noted that crypto scams are now tilting to social media where perpetrators promise unsuspecting investors classic profits if they invest in their disguised scam projects. More interestingly, the report revealed that scammers no longer use weekly or monthly returns to entice their victims, instead, they now promise juicy returns in a matter of hours.
The upcoming licensing of 50 crypto firms by the FSCA is a major milestone for South Africa as it advances in regulating its digital assets markets to improve the adoption of the rapidly evolving financial innovation. Also, the proactive measures by FSCA project South Africa as a pioneer in facilitating the creation of a safe and compliant business environment for digital assets transactions.
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