South Africa Financial Regulator will Review 36 Crypto Firms for Licensing in December
The Financial Sector Conduct Authority (FSCA), the main financial regulator in South Africa, has examined 128 applications from crypto asset service providers (CASPs), but it only intends to consider 36 of them at its next meeting in December. Licensing
On December 12, the FSCA’s Licensing Executive Committee will review the presentations made by thirty-six licensees. On February 13, 22 more applications are slated for review, and on March 12, the remaining 14 applications will be taken into consideration.
To find companies that qualify for the licenses, the FSCA will use several guideline principles with an emphasis on risk management, consumer protection, and market participation.
The report states that the FSCA received 93 applications in October and 128 more by the last day of the application process, which was November 30. Nineteen of the submissions were declined because of insufficient operational policies and procedures and insufficient experience.
The government’s focus will be on analyzing the services that the companies provide, namely on quantity, quality, and whether or not they offer instruments that serve the larger market, such as payment and custodial rails. With the country’s growing population of digital asset consumers, this method should improve safe investing. Crypto Licensing South Africa
The evaluation will take into account the degree of internal regulation at each company, with particular attention paid to disclosure procedures, conflicts of interest, and Know-Your-Customer (KYC) regulations.
Read Also: Kenya Lawmakers Introduce Changes to Address Cryptocurrency Taxation
To avoid customer complaints and increase investor trust, cyber risk management—which addresses credit counterparty risk management and complaint handling—will also be important.
On November 30, the FSCA released its “Cryptoasset Market Study 2023” in addition to evaluating these applications. 60% of all cryptocurrencies traded in South Africa, according to the report, fall under the category of “unbacked crypto assets.” These unbacked assets consist of some kinds of centrally issued tokens, which make up 4% of the market share, non-fungible tokens (NFTs), which account for 26% of the market share, and stablecoins, which make up 26% of the market share.
Additional survey findings showed that just 8% of CASPs reported revenues higher than R100 million ($5.4 million), with the average yearly revenue of South African crypto asset providers falling between ZAR 1 and 50 million ($53,000 and $2.7 million). Crypto Licensing South Africa
Additionally, the survey revealed that November 2022 had the greatest monthly trading volume in the South African cryptocurrency sector, with over R8 billion (about $427 million) transacted.
The FSCA issued a warning in July 2023, demanding that any CASP operating in the country obtain a license by the end of the year. After the deadline, the regulatory authority plans to take “enforcement action” against any unlicensed companies, which could include fines or possibly the closure of operations.
