In a move to regulate the fast-growing crypto industry, South Africa’s financial watchdog, the Financial Sector Conduct Authority (FSCA), has announce A deadline at the end of the year for the mandatory licensing of all cryptocurrency exchanges operating in the country.
The impending regulatory change comes as an attempt to mitigate potential financial risks associated with cryptocurrency transactions for consumers in South Africa. South Africa, the most developed economy in Africa, thus becomes the first economy on the continent to impose this licensing requirement.
This move underscores the country’s continued commitment to keeping pace with the evolving digital landscape while ensuring a regulatory framework that can enhance consumer protection in the crypto space.
Payment for authorized operations
The FSCA started accepting license applications a few weeks ago, and according to FSCA Commissioner Unathi Kamlana, the regulator has already received nearly 20 applications. The application deadline is set for November 30.
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Any crypto companies that continue to operate without a license after this deadline could face strict enforcement action, including potential closures or fines.
Kamlana said:
There is likely to be serious harm to financial customers when using crypto products, hence it makes sense for us to introduce the regulatory framework.
He added that the effectiveness of the measures will be evaluated over time and, in cooperation with the industry, adjustments and improvements will be made if necessary.
The regulations will affect several notable crypto exchanges originating in South Africa, such as Luno, which is owned by Barry Silbert’s Digital Currency Group, and VALR, which is backed by Pantera. In addition, international exchanges such as Binance that operate in the country will need to obtain the required licenses.
Consumer protection and education
The FSCA’s mandate extends beyond mere regulation. As part of the authority’s consumer protection efforts, they work to provide financial education and raise public awareness about cryptocurrency products.
Kamlana emphasized the importance of cautious investing, saying, “It is an area where you can lose a great deal of money, so you should think twice before exposing yourself to it.”
The FSCA continues to play an active role in shaping crypto and financial technology regulations. They are part of an “Intergovernmental Financial Technology Working Group,” which includes the country’s leading financial sector regulators and policymakers such as the National Treasury and the Reserve Bank of South Africa. The group aims to work in concert to create a safer and more orderly digital economy.
Meanwhile, regardless of the continued regulation of the industry, the cryptocurrency market has seen a bullish trend from the community and has shown an upward trend in the past 24 hours. Over the past day, the global crypto market is up nearly 1% with a market valuation of $1.259 trillion.
Featured image from Unsplash, chart from TradingView