The Financial Sector Conduct Authority (FSCA), the South African financial regulator, published a notice on October 19 stating that the country’s Financial Advisory and Financial Intermediary Services (FAIS) Act 2002 has been updated to include a definition of crypto assets. Such a decision had been expected for several months. With it, crypto assets are regulated in South Africa for the first time.
The FSCA notice, which became effective upon its publication in the The State Green Gazette establishes that a crypto asset is “a digital representation of value” that can be traded, transferred and stored electronically, but is not issued by a central bank. Furthermore, it “applies cryptographic techniques” and uses distributed ledger technology. The notification goes on to say that crypto assets are declared financial products.
This is a historic moment for South Africa:
Today the Financial Sector Conduct Authority (FSCA) declared a crypto asset as a financial product under the FAIS Act.
This Declaration was published in the Government Gazette as well as the FSCA website.
— Farzam Ehsani (@farzamehsani) October 19, 2022
This is a historic moment for South Africa:
Today the Financial Sector Conduct Authority (FSCA) has declared a crypto asset as a financial product under the FAIS Act.
This statement has been published in the Government Gazette as well as on the FSCA website.
According to the FAIS, a financial product is defined as a security, an obligation, “any monetary instrument” or an instrument that confers rights over securities and instruments. It can be offered by financial service providers, whether they are national or international companies, that are licensed in South Africa. Registration can be “an onerous procedure,” according to local press.
In November 2020, a draft declaration on crypto assets was published. In June 2021, a national working group created a normative roadmap for a regulatory framework. The regulation will help the country uphold Anti-Money Laundering/Know Your Customer (AML/KYC) standards and protect investors, but the details of the AML/KYC requirements have sparked some controversy. In February 2022, the South African National Treasury confirmed the intention to declare cryptocurrency a financial product and to improve supervision and enforcement of cryptocurrency transactions.
According to the Chainalysis Global Cryptocurrency Adoption Index 2022, released in September, South Africa ranks 30th in the world for cryptocurrency adoption. According to various estimates, between 10 and 13% of the South African population owns cryptocurrencies.
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