Regulation in South Africa: cryptos dubbed financial products
A clearer regulatory framework – The cryptocurrency regulation in South Africa evolves, imposing new requirements to companies in the sector, while providing the regulatory clarity necessary for the development of the industry in the long term.
Bitcoin treated as a financial product in South Africa
Unathi Kamlana, who serves as Commissioner of the Financial Sector Conduct Authority of South Africa, signed the statement. According to a notice published in the country’s official gazette, crypto-assets are henceforth considered as financial productsunder the South African Financial Adviser and Intermediary Services Act.
Crypto-assets are defined there as “any numerical representation of value”not issued by a central bank, but which may be “exchanged, transferred or stored electronically”both by natural and legal persons “for purposes of payment, investment or other forms of utility”.
This provision entered in force on October 19 last. It joins the statement of Kuben Naidoo, Deputy Governor of the South African Central Bank, who had indicated, a few months earlier, that his institution would consider crypto-assets as financial products. Thanks to this development, the Central Bank is now able to regulate crypto-assets.
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Reporting obligations and exceptions
In a series of tweets from October 19, Farzam Ehsanifounder and CEO of the South African cryptocurrency exchange Valrshared his opinion and details related to this statement.
He considers that, in general, this opinion constitutes a “positive step for the industry” crypto in South Africa, bringing the regulatory clarity which was missing until now. Indeed, this regulatory gap deterred traditional finance players from diving into cryptocurrencies.
In detail, this declaration now imposes a license application requirement for crypto service providers. They must complete this process between 1er June and November 30 of next year. These companies will also have to comply with the requirements that are “imposed on authorized financial service providers”.
Nevertheless, miners, node operators, and platforms NFT are, for the moment, in the list of exceptions, which would therefore not be affected by this declaration.
Since the beginning of this year, some South African institutions have been expecting a change in the laws on advisory services and financial intermediaries. Change is now underway for the benefit of regulatory clarity.
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