• South Africa is requiring digital asset exchanges to obtain a license by the end of this year.
• Financial Sector Conduct Authority (FSCA) commissioner Unathi Kamlana has reported that 20 applications for licenses have been received since the opening.
• Major trading venues such as Digital Currency Group-owned Luno and Pantera Capital-backed VALR will be affected by this initiative.
South African Regulations on Crypto Exchanges
South Africa’s financial regulator, Financial Sector Conduct Authority (FSCA), has announced that all crypto exchanges in the country will be required to obtain licenses by the end of 2021. FSCA commissioner Unathi Kamlana stated that approximately 20 license applications have been received since their recent opening and expects more before the Nov. 30 deadline. If any crypto exchange continues operating without a license after this date, enforcement action may include fines or closure of noncompliant firms.
Objective Behind Regulations
Kamlana further mentioned that introducing a regulatory framework for crypto products is a sensible approach due to the potential risk of serious harm to financial customers. He also expressed the need for time to determine the effectiveness of these measures and assured ongoing collaboration with industry players to refine and implement necessary changes. This makes South Africa the first country on continent to require digital asset exchanges to obtain licenses as part of global efforts tighten crypto regulations.
Applications Received So Far
The report quoted Kamlana as saying that several major trading venues originating from South Africa, including Digital Currency Group-owned Luno and Pantera Capital-backed VALR, have received approximately 20 license applications since their recent opening and expect more before the Nov 30th deadline. Global platforms such as Binance which operate in South Africa will also need to secure licenses in order to continue operations in the country beyond 2021.
Individuals Providing Financial Services
According an FSCA spokesperson, individuals providing financial services in crypto assets are required authorization from relevant authorities, excluding certain exceptions like crypto miners and NFT service providers . Failure to comply with this requirement constitutes a violation of law and regulatory action may be initiated against offenders if found guilty .
Ongoing Collaboration With Industry Players
The FSCA has been actively involved in developing policies around fintechs , collaborating with inter governmental fintech working group consisting of major financial sector regulators and policymakers , including National Treasury & South African Reserve Bank . The regulator intends time refine & implement necessary changes through continued involvement with industry players .