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The South African financial regulator has released a draft declaration of cryptocurrencies as financial products. The regulator says South Africa has experienced “an exponential increase in the supply and use of cryptographic resources.”
Crypto regulation of South Africa
South Africa’s Financial Sector Conduct Authority (FSCA) announced on Friday that it has released “a draft declaration of cryptocurrencies as a financial product under the Financial Advisory and Intermediary Services Act [FAIS]. “Comments on the draft declaration can be submitted until January 28, 2021. The regulator wrote:
Globally, there is a rapid and growing interest from retail investors to purchase crypto assets. South Africa has also seen an exponential increase in the supply and use of crypto assets.
The draft statement incorporates some recommendations for regulating cryptocurrency as a financial product under the FAIS law from a summary paper published this year by the Crypto Assets Regulatory Working Group (CAR WG).
The new rules apply to cryptocurrency service providers, including cryptocurrency exchanges, consultants and brokers. They will need to register with the FSCA as a financial service provider (FSP). The FSCA detailed:
The statement would have the effect that any person providing advice or intermediation services in relation to crypto assets must be licensed under the FAIS Act as a Financial Services Provider.
The financial regulator clarified: “The draft statement does not in any way affect the status of crypto assets in the context of other laws … nor does it attempt to regulate, legitimize or credit crypto assets.”
“The draft statement is simply intended as an intermediate step to mitigate some immediate risks in the cryptocurrency environment, pending the outcome of broader developments currently underway through the Crypto Assets Regulatory Working Group (CAR WG), which will inform future policy interventions to be implemented through a variety of regulators and laws, “the FSCA described.
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