South Africa’s Financial Sector Conduct Authority (FSCA) has made an announcement stating that all cryptocurrency exchanges operating within the country must obtain licenses by the end of the year.
About 20 license applications have already been submitted since the licensing process began a few weeks ago.
It’s all about organisation
Kamlana, representative of the Financial Sector Conduct Authority (FSCA) in South Africa, issued a warning stating that cryptocurrency exchanges operating without licenses after the deadline will face enforcement action, which could lead to closure or fines.
FSCA Commissioner Unathi Kamlana revealed in an interview More applications are expected before the November 30 deadline. Kamlana stressed that the regulator is ready to take “enforcement action,” which could include closing down or imposing fines on companies that continue to operate without a license after the deadline.
In a statement issued in Pretoria, Kamlana highlighted the potential risks to financial customers in their use of cryptocurrency products. He explained that introducing a regulatory framework is a logical step to mitigate these risks.
The FSCA aims to monitor the effectiveness of its measures and remains committed to cooperating with industry to refine and implement any necessary changes.
(embed) https://www.youtube.com/watch?v=43tB-bKS_DE (/embed)
South Africa, Africa’s most developed economy, has become the first country on the continent to mandate licensing for digital asset exchanges. Notably, notable trading venues including Luno, owned by Barry Silbert’s Digital Currency Group, and Pantera-backed VALR, have emerged from South Africa.
South Africa as an offshore haven
The FSCA’s move to introduce a regulatory framework for crypto products was prompted by concerns about potential harm to financial customers.
The FSCA collaborates with intergovernmental fintech working groups and key regulators to develop regulations for the crypto and fintech sectors, including major institutions such as the National Treasury and the Reserve Bank of South Africa.
The announcement comes at the same time that actions by US regulators, specifically those of the Securities and Exchange Commission against cryptocurrency firms, have contributed to the prevailing narrative of innovation-seekers seeking refuge abroad.
After the collapse of FTX, Coinbase CEO Brian Armstrong attributed a lack of clarity in regulations as the driving force behind the business’ move away from US jurisdiction. With the clear trend set by South Africa, some suggest that this forces the possibility of another asylum abroad.