South Africa’s Financial Sector Conduct Authority (FSCA) will decide on the fate of 50 crypto businesses’ licensing applications in the coming weeks. Gerhard van Deventer, the FSCA’s head of enforcement, stated in a podcast that 20 of the more than 100 firms that initially requested for a license had subsequently withdrawn their applications.
Late in 2023, just days before the November 30 deadline, the FSCA received a total of 93 applicants, which eventually increased to 105. These applicants included both existing holders of Financial Services Provider (FSP) licenses and new applicants. Diketso Mashigo, the FSCA’s compliance head, confirmed that some applicants had chosen not to pursue the license and instead decided to operate outside of the South African market.
Deventer, acknowledged that the cost of obtaining an FSP license may have deterred some applicants. He also suggested that some withdrew because they realized they could not meet a crucial requirement.
One important condition that many candidates struggled with was having an acceptable key person. This important person must have specialized and necessary expertise, qualifications, and abilities, which might be difficult to obtain in the relatively young industry of cryptocurrencies. According to Deventer, “crypto has not been around for a long time,” making it difficult to recruit someone with the appropriate skills. Some applicants who found themselves in this circumstance said they would reapply if a suitable key individual was discovered.
Regarding changes to regulations proposed by the FSCA, Deventer highlighted that the motivation behind these amendments is to combat scammers who operate outside the regulatory framework. He emphasized that once the new regulations come into effect, it will be impossible for such entities to evade regulatory oversight of their activities.
The cryptocurrency industry in South Africa is undergoing a process of increased regulation and oversight to ensure the security and protection of investors and consumers. The FSCA’s efforts to evaluate license applications and enhance regulations are part of their commitment to creating a more secure and well-regulated cryptocurrency ecosystem within the country.
As the FSCA completes its examinations of the remaining license applications, the cryptocurrency landscape in South Africa may change, with more enterprises getting regulatory authority to operate in this dynamic industry.
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