South Africa Approves 63 New Crypto Licenses

Politics

Jul 2, 2024 at 6:16 PM

Updated: July 2, 2024 at 11:40 PM

2 minute read

This brings the total number of crypto licenses approved in South Africa to 138. Crypto on- and off-ramp service Kotani Pay is one of the newest licensees.

Image: FSCA; Nathanaelginting

The Financial Sector Conduct Authority (FSCA) South Africa significantly expanded its list of authorized cryptocurrency service providers (CASPs), approving 63 new applications in the second quarter of 2024.

Driving the news

• As of 30 June 2024, the total number of authorised CASPs in South Africa was 138, up from 75 in April 2024, the FSCA said in a statement on 2 July. Press release.
• This announcement comes just days after the FSCA revealed 30 ongoing investigations into rogue crypto financial services.
• Since the start of the procedure on 1 June 2023, the FSCA has received a total of 383 CASP licence applications.
• The regulator rejected five applications, while 80 applicants withdrew voluntarily after discussions with the FSCA about the appropriateness of their business models.
• The remaining applications are still under consideration by the regulator.
• On- and off-ramp encryption service Pay Kotani is one of the newest licensees. The FSCA has published a full list of all 138 licensed CASPs on its official website.

Key details

• According to the FSCA, one of the main reasons for refusal of licence applications is failure to meet operational capacity requirements, such as providing clear business plans and operational frameworks.
• The regulator also highlighted the failure to demonstrate the required knowledge and practical experience in cryptocurrencies.
• Institutions whose applications have been rejected or withdrawn may reapply if they can demonstrate full compliance with licensing requirements.
• Unauthorized CASP-related activities will be subject to regulatory measures, except those that have applied by November 30, 2023 and are awaiting finalization of their application.

Key Quote

The FSCA states:

“Institutions that have voluntarily withdrawn their applications or have had their applications rejected by the FSCA are welcome to reapply in the future, provided they can demonstrate full and proper compliance with the applicable licensing requirements. In the meantime, they may not engage in any CASP-related activities as defined by the FAIS Act.”

Because matter

• This licensing effort is part of a broader effort by South Africa to regulate the cryptocurrency sector and address concerns about money laundering and terrorist financing risks.
• The increase in authorized CASPs indicates growing legitimacy and oversight in the country’s cryptocurrency sector.
• It also demonstrates South Africa’s commitment to balancing innovation with regulatory compliance, particularly given its current status in FATF grey list.

Of note

• The FSCA’s licensing powers are limited to authorising and supervising CASPs only for financial services relating to cryptocurrencies as defined in the FAIS Act.
• This authorisation does not recognise cryptocurrencies as legal tender or “cryptocurrency”, the FSCA wrote.
• The South African Reserve Bank does not currently recognize cryptocurrencies as currency.
• Cryptocurrencies are defined as digital representations of value that are not issued by a central bank but can be exchanged, transferred or stored electronically, apply cryptographic techniques and use distributed ledger technology.

Source