Regulators make bold moves to get South African crypto platforms regulated as soon as possible.
South Africa’s financial conduct regulator announced on Thursday that cryptocurrency financial companies must apply for a license between June 1 and November 20, 2023, in order to operate legally.
According to Eugene Du Toit, director of the Regulatory Frameworks Department of the Financial Sector Conduct Authority, a statement made on Wednesday that crypto assets are financial products does not imply that they are legal tender.
“We are not legitimising crypto assets,” Du Toit said. “We are not giving credence to crypto assets.”
Global financial regulators have been debating how to regulate the expanding number of digital cryptocurrencies and tokens, the prices of which have fallen from historic highs reached in November last year.
Since regulators do not consider cryptocurrencies to be legal tender, the FCSA purposefully avoided using the term “cryptocurrencies” in its terminology, according to the regulator’s head Unathi Kamlana.
According to him, the declaration would provide authorities the power to combat fraud and safeguard clients.
Non-fungible tokens (NFTs) are not included by the declaration since they behave more like investments in conventional works of art, according to Kamlana, who also indicated they will keep an eye on the NFT market.
The declaration and rules to be followed might aid South Africa in avoiding being placed on the Financial Action Task Force’s greylist for having shortcomings in its anti-terrorism funding and anti-money laundering framework, according to the regulators.
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The governor of South Africa’s central bank warned that the country risked the possibility of being placed on a “grey list,” which, according to IMF researchers, last year reduced capital inflows by an average of 7.6% of GDP.
In an interview with Reuters, Kamlana predicted that further regulations regarding the exposure of financial institutions to cryptoassets will probably be implemented, along with maybe more client verification procedures. However, he declined to provide a timeline.
When questioned if regulators had been reluctant to react to the current surge in interest in crypto assets, he responded, “South Africa is actually amongst the few (countries) that’s ahead of the curve in this space.”