Yesterday, 19 October 2022, the Financial Sector Conduct Authority (FSCA) declared a crypto asset as a financial product under the FAIS Act.
This is a historic moment for South Africa.
This Declaration was published in the Government Gazette as well as the FSCA website.
The reason for the declaration was cited as being due to the mounting risk in the crypto asset environment, but it also looks this action was done to comply with a Financial Action Task Force (FATF) deadline for remediation of recommendations for South Africa:
"Recommendations not fully remediated or significantly progressed by October 2022 can lead South Africa to be placed on the FATF grey-list, which could have materially negative consequences for the country as a whole."
South African Crypto Asset Service Providers
South African 'Crypto Asset Service Oroviders' (CASPs) like VALR (@VALRdotcom) can continue operating but must:
Apply for a license under the FAIS Act between 1 June 2023 and 30 November 2023.
Comply with "Fit and Proper", "Code of Conduct" and other reqs of licensed FSPs.
Provide the FSCA with any information the FSCA requests that is in the possession of, or under the control of, the person, that is relevant to the financial services and/or similar activities rendered by such person.
Exemptions to the Declaration
There are some exemptions to this Declaration:
1) Miners
2) Node operators
3) NFTs and NFT platforms (at this stage)
Overall this is a positive step for the crypto industry and South Africa in general.
This Declaration will open the door to many of the large traditional financial institutions (TradFi) in South Africa to start providing crypto products and services.
TradFi has been hesitant to enter crypto in South Africa because of the lack of regulatory clarity in SA. This has been said to me by nearly all of the TradFi players.
This Declaration now provides the regulatory clarity.
Closing Thoughts
We're still in the very early stages of understanding how crypto is going to transform the global financial system, and today's Declaration is an important milestone in this journey.
This day was always going to come. It is now here. I'm very excited to see what the future brings with it.
Infocredits: @FarzhamEsani,
Founder and CEO at VALR.com
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