Crypto exchanges flood South Africa with applications as licensing process commences

South Africa’s Financial Sector Conduct Authority (FSCA) has given the green light to 59 license applications from cryptocurrency platforms, as reported by Reuters. These platforms will now be regulated under existing laws. Reuters also cited FSCA divisional executive Felicity Mabaso, who stated that out of a total of 355 applicants, the FSCA is currently processing 262 licensing applications from crypto exchanges. The approved licenses were granted on March 12. The crypto companies applied for these licenses under the deadline of November 30, 2023, and will be regulated under the Financial Advisory and Intermediary Services Act (FAIS). This act will introduce new customer protections and empower regulators to take enforcement actions. The South African Reserve Bank (SARB) Financial Surveillance Department will be responsible for conducting supervision under this act. FSCA Commissioner Unathi Kamlana informed Bloomberg of these developments. South Africa is reportedly the first African country to license crypto exchanges. Initially, the country had considered establishing a separate regulatory framework for cryptocurrencies when they began the regulatory process in 2021. These plans were still in progress in 2022, and the regulations were expected to be finalized that year. However, later in 2022, the SARB announced that cryptocurrencies would be classified as financial assets, rather than currency, in the regulations set to be released in 2023. Ultimately, the FSCA classified cryptocurrencies as financial products. In July, the FSCA commissioner stated that they had received 20 applications ahead of the November deadline and warned that crypto exchanges operating without licenses after the deadline would face enforcement actions, including fines and closure. In December, the FSCA announced that they had received a total of 128 applications, with 72 of them being reviewed between December and March 14. The South African National Treasury also revealed in its annual budget review in February that it would be implementing a policy change to include stablecoins in its definition of crypto assets.