South Africa has moved forward by classifying crypto-assets as financial products in accordance with a notice in the government gazette enabling them to be regulated.
Crypto-assets are not issued by a central bank, but are capable of being traded, transferred or stored electronically. A crypto-asset, also known as “a digital representation of value”, must be regulated in South Africa from the date of publication, according to The Financial Sector Conduct Authority (FSCA).
South Africa lacks regulatory requirements for service providers of virtual assets. However, Crypto traders will now have to get licensed under the new regulation. The financial regulatory body provides that these regulations will assist them in receiving data, promoting disclosure, and understanding some of the risks in virtual assets business models.
The Regulations set to be introduced include applying foreign exchange controls and licensing crypto trading companies. In addition, FAIS further lists several financial products like collective investment schemes, insurance, and securities and crypto assets that were previously excluded.
Jurisdictions and international standard-setting bodies have made swift progress by developing a regulatory framework for crypto assets. The FSCA says it will work with other regulatory bodies, such as SARS and the Competition Commission.
The regulation declaration takes effect immediately. However, it will be moving through a transitional period, and providers must apply for the relevant licence between 1 June 2023 and 30 November 2023.
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