South Africa’s Financial Sector Conduct Authority (FSCA) has announced that all cryptocurrency exchanges in the country will be required to obtain licenses by the end of the year. FSCA commissioner Unathi Kamlana stated that the agency has already received around 20 license applications and expects more before the November 30 deadline. If exchanges continue to operate without a license after the deadline, the regulator plans to take enforcement action, which could include fines or the closure of non-compliant firms.
The introduction of a regulatory framework for crypto products is seen as a sensible approach to mitigate potential risks to financial customers. The FSCA aims to collaborate with the industry to refine and implement necessary changes and determine the effectiveness of the measures over time.
This makes South Africa the first country in Africa to require digital asset exchanges to obtain licenses, as regulators worldwide continue to tighten crypto regulations. Major exchanges in South Africa, such as Luno and VALR, as well as global platforms like Binance operating in the country, will need to secure licenses.
Individuals providing financial services in crypto assets, with certain exceptions like crypto miners and NFT service providers, must obtain authorization. Non-compliance with this requirement is considered a violation of the law, and regulatory action may be initiated by the relevant authorities.
The FSCA has been actively involved in crypto and fintech regulations and has collaborated with an inter-governmental fintech working group, which includes major financial sector regulators and policymakers in South Africa.
This move by South Africa reflects a global trend of increasing regulations in the cryptocurrency sector. For example, Singapore’s Monetary Authority announced that crypto service providers in the country will be required to place customer assets into a statutory trust by the end of the year for secure storage.
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