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South Africa’s financial regulator has approved 59 license applications from crypto platforms looking to provide services to residents. The Financial Sector Conduct Authority (FSCA) granted the approvals on March 12, requiring crypto companies to comply with several recent changes to financial law regarding digital assets.
The official approval of crypto firms guarantees government involvement and sanitizes South Africa’s crypto sector. Much of the global crypto industry has been criticized for years for inadequate regulation and insufficient protection for investors despite crypto’s extensive use as an investment channel. Several major cryptocurrencies, including Bitcoin (BTC), Ether (ETH), and even Ripple’s XRP, have returned impressive gains to holders over the years, attracting more investors over time. Since a New York judge ruled in Ripple’s favor against the United States Securities and Exchange Commission, nearly every Ripple coin price prediction is bullish on the asset’s chances as adoption and investments continue. While the Ripple coin is currently at $0.5867, the outlook from Business2Community’s Hyunsoo Kim puts the asset at $2 by the end of 2024.
At a financial conference, FSCA divisional executive Felicity Mabaso said the regulator received 355 license applications, with 262 pending. Last year, the FSCA gave exchanges and cryptocurrency platforms a November 30 deadline to submit applications for licenses or face enforcement. FSCA Commissioner Unathi Kamlana told Bloomberg that application processing is ongoing and done gradually because of the numbers.
Kamlana explained that the FSCA decided to use the country’s existing Financial Advisory and Intermediary Services Act (FAIS) for the crypto sector. According to the Commissioner, the FAIS is robust enough to cover the most important parts of the crypto business, including specific user protections and enforcement action where necessary. Admitting that a review might be inevitable, Kamlana said:
“As we license and supervise, we will discover that perhaps there are gaps that cannot be closed by the existing regulatory framework, the FAIS Act. And we might need to build on that as we discover what those are.”
While there are no specifics of the approved companies, the licensed entities should include crypto exchanges and firms providing custody services. Regulatory oversight should also cover crypto brokerage firms and payment processors dealing with cryptocurrency transactions.
In 2021, South Africa considered creating a new regulatory framework to govern the crypto industry. Authorities continued working on this until 2022 and planned to complete the framework by the end of the year. However, the South African Reserve Bank (SARB) declared crypto a financial asset, not a currency, with the FSCA stating that digital assets are financial products.
South Africa decided to face crypto squarely as adoption gradually increased. In 2017, a survey concluded that 47% of South Africans had already invested in crypto or were looking to invest. In addition, a different report in the same year showed a 100% increase in Bitcoin wallet downloads. In 2020, crypto exchange Luno reported that South Africa’s crypto ownership level was the third-highest worldwide at 13%.
On adoption, a South African payments infrastructure company, Stitch, launched “Pay with Crypto” last year, a feature that allows customers to use crypto to pay for goods and services. Another company, Paycorp, created a CryptoExpress app that allows people to withdraw crypto in South African Rands at more than 3,000 ATMs.
This post and content is sponsored, written and produced by Bazoom.
