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South African Regulator Mandates Licensing for Crypto Exchanges by November 30, According to Report
South Africa’s financial authority has urged exchanges operating within the nation to secure a license by the conclusion of 2023.
Crypto businesses that do not comply with this directive prior to the deadline may face fines or have their operations shut down by regulatory bodies.
New Licensing Framework in South Africa
The Financial Sector Conduct Authority (FSCA) has mandated that crypto exchanges in South Africa obtain a license before the November 30 deadline.
As per FSCA Commissioner Unathi Kamlana, approximately 20 firms have submitted applications since the regulatory body initiated the licensing process a few weeks ago, with expectations of additional companies applying before the deadline.
In October 2022, the FSCA classified cryptocurrency as a financial product following a proposal for declaration in November 2022 and a consultation regarding the draft regulation. Furthermore, the final declaration indicated that crypto exchanges in South Africa are required to be licensed by the end of 2023. Noncompliance could result in fines of 10 million rands ($536,387), a prison sentence of up to 10 years, or both penalties.
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While the FSCA initially suggested a four-month period for crypto businesses to submit their license applications, some analysts argued that this timeframe was inadequate, with suggestions for extending it to six months or even two years. In response, the financial authority extended the application period to six months in the final declaration, asserting that the initial timeframe was unnecessary and unjustified.
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South Africa’s Notable Crypto Scams
The South African regulator continues to assert that the crypto asset sector is fraught with risks, with Kamlana noting that “it is an area where you can lose quite a bit of money, so you must think twice before exposing yourself to it.”
The nation, which has witnessed a growing interest in this asset class, has also been the site of several high-profile cryptocurrency scams resulting in investor losses amounting to billions of dollars. In June 2021, the founders of the South African crypto investment platform Africrypt, the Cajee brothers, reportedly absconded with nearly 70,000 BTC (valued at over $2 billion).
Additionally, Johannes Steynberg, CEO of the international multi-level marketing scheme Mirror Trading International (MTI), allegedly vanished with 29,000 bitcoin in customer assets. Following his apprehension in Brazil, a US court recently mandated Steynberg to pay a penalty of $3.4 billion.
Kamlana further stated that the FSCA has implemented consumer protection measures, which include raising awareness about crypto products and providing financial education.
According to the FSCA Commissioner:
“There is potentially serious harm to financial customers when using crypto products, and therefore it makes sense for us to introduce the regulatory framework. Time will tell the effectiveness of our measures, and we will continue to work together with the industry to refine and make changes where and if necessary.”
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