July 4, 2023 at 14:59 GMTModified date: July 4, 2023 at 14:59 GMT
July 4, 2023 at 14:59 GMT

South Africa enforces licences for crypto firms

South Africa has enforced a new licensing regime on digital asset exchanges operating within its borders. Firms have been asked to apply by November this year.

Johannesburg City Centre, South Africa. Source: Unsplash

South Africa has enforced a new licensing regime on digital asset exchanges operating within its borders. Crypto companies have been asked to apply for the licence by November this year.

This involves registering with the country’s financial regulator, the Financial Sector Conduct Authority (FSCA). The process, which was initiated a few weeks ago, has already received approximately 20 licence applications from different exchanges.

In an interview with Bloomberg, FSCA Commissioner Unathi Kamlana stated that the regulatory watchdog plans to take “enforcement action” against crypto exchanges that fail to register. The deadline for the same is 30 November 2023.

Many of the continent’s largest platforms operate from South Africa. The introduction of this regulatory framework is motivated by the belief that there is “potentially serious harm to financial customers when using crypto products”.

Kamlana added to this by saying: “Time will tell the effectiveness of our measures, and we will continue to work together with the industry to refine and make changes where and if necessary.”

Countries around the world have tightened their grip on the digital asset industry of late.

Rising number of large-scale crypto scams in South Africa is another reason behind the recent regulatory action. Back in 2021, 70,000 Bitcoin vanished from a platform called Africrypt which was run by the Cajee brothers and fraudulent multilevel marketing scheme Mirror Trading International Proprietary in the country.

Following these concerns, South Africa took a step forward by becoming the first country to require digital asset exchanges to secure licences.

The African country is known to have the region’s highest number of crypto users too. As one of the most developed nations in the continent, South Africa has also been experimenting with central bank digital currencies (CBDCs).