VALR, a cryptocurrency exchange based in South Africa, has received new licenses from the Financial Sector Conduct Authority (FSCA). These licenses, known as crypto asset service provider (CASP) licenses, are a result of new requirements for companies in the industry. VALR is now one of the first cryptocurrency firms in the country to hold both Category I and II CASP licenses.
The CEO of VALR, Farzam Ehsani, described the acquisition of the CASP license as a significant milestone for the exchange. The company has been actively collaborating with South African regulators to develop a regulatory framework that promotes the growth of the cryptocurrency and blockchain sector while ensuring the protection of investors.
Ehsani highlighted the importance of compliance, security, and providing a trustworthy platform for the crypto community. He commended the regulators for their efforts in taking this important step for the nation and emphasized the company’s dedication to these principles.
The FSCA opened license applications in June 2023, giving crypto asset service providers a six-month window to apply for a license and comply with South African regulations. The deadline for applications was November 2023, and companies will be regulated under the Financial Advisory and Intermediary Services Act.
Ehsani explained the distinction between the two categories of licenses. A Category I license is the standard license required for a CASP in South Africa to offer advice or exchange services to customers. On the other hand, a Category II license, also known as a discretionary mandate license, allows customers to grant VALR and other licensed Category II FSPs the authority to use their discretion in structuring their investment portfolios.
The regulatory framework aims to safeguard customers and investors and provides regulators with the power to take enforcement action in case of compliance failures. South Africa is the first African country to formally license cryptocurrency exchanges through such frameworks, which have been in development since 2021.
In March 2024, the FSCA approved 59 license applications from cryptocurrency platforms. At that time, there were 262 licensing applications being processed out of 355 applicants. Additionally, in January 2023, the Advertising Regulatory Board in South Africa updated its requirements to address the growing popularity of cryptocurrency investing. These changes were implemented to protect consumers from unethical advertising practices.
Under the new advertising code, companies and individuals in South Africa are required to adhere to specific advertising standards when promoting cryptocurrency products and services. Advertisements must clearly state that investments in cryptocurrencies carry the risk of capital loss due to their volatile nature. They must also be easily understandable, provide balanced information about the associated risks and benefits, and comply with the amended rules for social media influencers.
In conclusion, VALR’s acquisition of CASP licenses from the FSCA is a significant achievement for the company and the cryptocurrency industry in South Africa. The regulatory framework implemented by the FSCA aims to protect customers and investors while fostering the growth of the sector.