On July 2, South Africa’s financial services industry regulator, the Financial Sector Conduct Authority (FSCA), announced the approval of an additional 63 crypto asset service provider (CASP) license applications. This move brings the total number of licensed CASPs in South Africa to 138. The FSCA has received a total of 383 applications, with only five being declined.
The FSCA’s approval of these licenses does not equate to recognizing crypto assets as legal tender or ‘cryptocurrency’ in South Africa. The country’s central bank also does not acknowledge crypto assets as currency, countering any media reports suggesting otherwise.
Alongside the approvals, the FSCA noted that 80 applications were voluntarily withdrawn by applicants after engagements with the regulator. Entities whose applications were rejected can re-apply if they meet the required fit and proper criteria under local financial services law. Until approved, these entities are prohibited from engaging in any CASP-related activities as defined under the Financial Advisory and Intermediary Services (FAIS) Act.
The FSCA emphasized its ongoing scrutiny of the remaining applications and issued a clear warning to unlicensed entities. “Any institution or person found to be undertaking such activities without authorization will be subject to regulatory action by the FSCA,” the regulator stated.
This regulatory update is part of the FSCA’s broader efforts to bring clarity and order to South Africa’s burgeoning crypto sector. By ensuring that service providers meet stringent requirements, the FSCA aims to protect consumers and maintain the integrity of the financial system.
The regulatory body’s proactive stance highlights the growing importance of crypto assets within the financial landscape, while also underlining the challenges of integrating such assets within existing legal frameworks. Despite the increase in licensed CASPs, the lack of recognition as legal tender means that crypto assets remain in a somewhat ambiguous legal position in South Africa.
As the FSCA continues to process the remaining applications, the industry and potential investors will be closely monitoring the developments. The regulator’s actions will likely have significant implications for the future of crypto asset services and their regulation in South Africa.
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