According to a report published by Bloomberg, South Africa is identifying cryptocurrency companies that will receive licenses to operate digital assets later this month.
The US advisory firm noted that South Africa's Financial Conduct Authority (FSCA) will issue 60 cryptocurrency licenses to companies in the sector, in a move to ensure the security and protection of investors participating in this market.
South Africa’s financial regulator opened cryptocurrency license applications last year, receiving more than 300 such applications, according to Bloomberg’s report. However, later this month, it will grant licenses to only 60 of the 300 cryptocurrency companies that applied for the regulator’s approval.
Unathi Kamlana, FSCA Commissioner, explained that this is the first wave of cryptocurrency licenses that the FSCA will issue. He noted that due to the multitude of applications received, the authority will process the necessary licenses gradually and that those companies that have not been approved have the opportunity to reapply to the regulator.
The issuance of these regulatory licenses places South Africa among the first countries on the African continent to legalize commercial activity with cryptoassets and allowing companies in the sector to operate in a regulated manner.
As several reports have highlighted, South Africa is one of the most emerging markets in the growing cryptocurrency market.
South Africa to regulate cryptocurrencies under Financial Advisory and Intermediary Services Act
Regulatory licenses to be issued by South Africa's financial authority at the end of March will allow cryptocurrency and digital asset companies to legally operate in the country, he pointed Bloomberg.
According to the authority, the aim is not to establish a new regulatory regime, but to supervise cryptocurrencies under the Financial Advisory and Intermediary Services Act, recognising them as a financial product. With this, South Africa seeks to build trust in the crypto market in general and ensuring the safety of investors. The authority also indicated that the issuance of regulatory licenses represents an important step on the path to developing a new policy that leads to the sustainable development and growth of the industry in the country.
Regulators have their eyes on cryptocurrencies
South Africa’s cryptocurrency licensing regime comes at a time when global regulators have their eyes set on the cryptocurrency industry.
Countries such as the United Kingdom, Germany, and Switzerland are leading the charge to regulate the emerging crypto industry. Also, the United States, Japan, and Denmark are adapting their policies and regulations to the innovation of the crypto industry and Web3. Now South Africa is taking important steps to regulate and oversee the growth of the cryptocurrency market responsibly.
In 2022, Kuben Naidoo, Deputy Governor of the South African Reserve Bank, recognized that the skeptical view of regulators towards cryptocurrencies had been changing and that these digital assets were being considered as financial assets, which would be regulated in the country in order to allow the development of innovation.
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