South Africa‘s financial conduct regulator (FSCA) announced on Thursday that cryptocurrency financial institutions must apply for a license between June 1 and November 20, 2023.
At a press conference on Wednesday, Eugene Du Toit, Head of the Regulatory Frameworks Department at the Financial Sector Conduct Authority (FSCA), clarified that the agency’s declaration that crypto assets are financial products does not make them legal tender.
Du Toit reiterated, “We are not legitimizing crypto assets. We are not giving credence to crypto assets. ”
Unprecedented drops in crypto prices from all-time highs have left financial regulators around the world scrambling to control the proliferation of cryptocurrencies and other digital assets.
Unathi Kamlana, the FCSA’s chief regulator, has stated that the agency refers to crypto assets rather than cryptocurrencies because it does not consider them legal money.
He noted that the declaration would provide authorities with the necessary authority to combat scams and protect consumers.
The declaration, according to Kamlana, does not apply to non-fungible tokens (NFTs), which “function more like traditional art investments,” but the FCSA would, of course, keep an eye on the NFT market.
South Africa’s regulators have stated that if the declaration and regulations that will follow are effective, the country could benefit from not being greylisted by the global watchdog, the Financial Action Task Force, due to deficiencies in the country’s regime against terrorism financing and money laundering.
In August, South Africa’s central bank governor warned that the country was in danger of being greylisted, which, according to IMF research from last year, reduces capital inflows by an average of 7.6 percentage points, or about 2% of GDP.
Kamlana told Reuters that he thinks there will be more regulations governing how financial institutions deal with crypto assets and possibly more customer verification requirements, but he did not specify when these would be implemented.
When asked if regulators were slow to respond to the recent surge in interest in crypto assets, he said, “South Africa is actually amongst the few (countries) that are ahead of the curve in this space.”
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