South Africa is set to become the first country in Africa to require digital asset exchanges to obtain licenses by the end of the year, according to a report by Bloomberg. The Financial Sector Conduct Authority (FSCA) announced that approximately 20 license applications have been received since the recent opening, with more expected before the November 30 deadline.
The FSCA’s Commissioner, Unathi Kamlana, emphasized the need for a regulatory framework for crypto products due to the potential risks they pose to financial customers. If exchanges continue operating without a license after the deadline, the regulator intends to take enforcement action, potentially involving fines or closure of non-compliant firms.
This move affects major trading platforms originating from South Africa, including Luno (owned by Digital Currency Group) and Pantera-backed VALR. It also impacts global platforms like Binance operating within the country, which will now need to secure licenses.
The FSCA has been actively involved in collaborating with other financial sector regulators and policymakers through an inter-governmental fintech working group. This collaboration includes key entities such as the National Treasury and the South African Reserve Bank.
This regulatory development aligns with the global trend of increasing regulations in the cryptocurrency sector. Countries around the world are tightening their grip on crypto-related activities to ensure consumer protection and mitigate risks.
Singapore’s Monetary Authority announced a similar requirement for crypto service providers to place customer assets into a statutory trust for secure storage by the end of the year. These actions reflect the growing consensus on the need for more stringent regulation in the cryptocurrency industry.
As South Africa takes this pioneering step towards licensing crypto exchanges, it sets an example for other African countries to consider similar regulatory measures. The FSCA aims to collaborate with the industry to refine and implement necessary changes while evaluating the effectiveness of the new regulatory framework.
The transition to a licensed ecosystem for digital asset exchanges in South Africa aims to provide greater security and protection for investors, promoting trust and stability in the cryptocurrency market within the country.