On Friday, November 20, South Africa’s Financial Sector Conduct Authority (FSCA) published an announcement that is perceived as a step in the right path for the country’s cryptocurrency industry. The organization published a “draft Declaration” that expressed their intention to declare crypto assets as a financial product under South Africa’s Financial Advisory and Intermediary Services (FAIS) Act. According to FSCA, the declaration was prompted by the high-rising participation of South Africans in the use of crypto assets.
This declaration means that any person or company that provides advisory services or acts as an intermediary with respect to crypto assets in South Africa is required to be licensed as a financial services provider under the FAIS act, and also comply with all the requirements of the act. “The draft Declaration is intended to give partial effect to some of the recommendations contained in the Position Paper by declaring crypto assets as a financial product under the FAIS Act.”
The Declaration would have the effect that any person furnishing advice or rendering intermediary services in relation to crypto assets must be authorised under the FAIS Act as a financial services provider, and must comply with the requirements of the FAIS Act. This will include crypto asset exchanges and platforms, as well as brokers and advisors,” the statement declares.
FSCA believes that this declaration is necessary to determine whether additional regulations on crypto assets should be made. According to the statement, “Licensing of intermediaries is also necessary to improve the quality of data for policymakers and regulators about the crypto asset environment, and to consider whether there is a need for further regulatory interventions.” The draft Declaration would also ensure that a robust advisory framework is put in place to “mitigate certain immediate risks in the crypto assets environment.”
Although this declaration by the FSCA is perceived as a step in the right path for the South African crypto industry, it, however, does not entirely signal a green light for crypto assets in South Africa. It is only an interim step in the gallery of events that are yet to unfold. “The draft Declaration in no way impacts the status of crypto assets in the context of other
laws such as exchange control regulations, requirements under the Pension Funds Act and Collective Investment Schemes Act and so forth, nor does it attempt to regulate, legitimise or give credence to crypto assets.”
The declaration was received with diverse opinions from stakeholders in the South African crypto industry, all indicative of positive news for the industry. Richard de Sousa, AltCoinTrader CEO, expressed that “The FSCA have no alternative but to declare crypto assets as financial products.” The AltCoinTrader boss believes that this is “indicative of the state of crypto” and reflects a positive news for the industry.
Luno’s General Manager for Africa, Marius Reitz, says that “This is positive for the market, and may well lead to more adoption because consumers will have more comfort that the exchanges they interact with, comply and meet the requirements set out by regulators.” According to Reitz, “This move will make it safer for consumers, making it easier for them to distinguish between a scam or non-licensed entity and a licensed entity. It will also provide the consumer with the confidence and comfort that an exchange has the expertise to safeguard their private data and cryptocurrency.”
This declaration is just the beginning of many regulatory interventions to be introduced into South Africa’s crypto industry. Hopefully, this may be followed by more positive actions from the South African government and other regulatory bodies in the country, in relation to the crypto industry in South Africa.