South Africa’s crypto market shakes up as FSCA reviews dozens of license applications

South Africa's crypto market shakes up as FSCA reviews dozens of license applications

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  • The Financial Sector Conduct Authority (FSCA) of South Africa received 128 crypto asset service provider (CASP) applications, with plans to review 36 in December, 22 in February, and the remaining 14 in March.
  • FSCA’s “Crypto Assets Markets Study” for 2023 indicates that 60% of traded crypto in South Africa are unbacked assets, with the majority of CASPs earning between 1 and 50 million rands annually.
  • The FSCA emphasizes stringent regulatory compliance, focusing on KYC onboarding, cyber risk, and other operational standards, and warns of enforcement actions against CASPs operating without a license post-deadline

The Financial Sector Conduct Authority (FSCA) of South Africa is making significant strides in regulating the burgeoning cryptocurrency market. As of November 30, 2023, the FSCA has received 128 applications from crypto asset service providers (CASPs), signaling a growing interest in the sector. The regulator’s approach is methodical and stringent, focusing on ensuring robust operational standards and compliance with financial regulations.

In an update, the FSCA disclosed that 36 of these applications have completed assessments and are scheduled for presentation at the Licensing Executive Committee meeting on December 12, 2023. An additional 22 applications, pending for various reasons, will be reviewed on February 13, 2024, while the final 14, whose analysis is yet to begin, are slated for March 12, 2024. This phased approach underscores the FSCA’s commitment to a thorough evaluation, encompassing aspects like Know Your Customer (KYC) onboarding, data protection, and cyber risk management.

A snapshot of South Africa’s crypto market

The FSCA also released its “Crypto Assets Markets Study” for 2023, offering insights into the composition and dynamics of South Africa’s crypto market. A key finding of the study is that 60% of all traded crypto assets in the country are unbacked, distinguishing them from stablecoins, nonfungible tokens (NFTs), and some centrally issued coins. This statistic reflects the diverse nature of the crypto assets being traded in South Africa.

The study further reveals that the average crypto asset provider in South Africa generates an annual revenue between 1 and 50 million South African rand. However, only a small fraction (8%) exceeds the 100 million rand revenue mark. The South African crypto market saw its highest monthly transaction value in November 2022, peaking at over 8 billion rand. These figures not only demonstrate the market’s growth potential but also the need for regulatory oversight to ensure its stability and integrity.

Regulatory oversight and future prospects

The FSCA’s proactive stance in regulating crypto asset service providers is a positive development for the sector. By setting clear guidelines and evaluating applications based on a range of factors, including the criticality of market services and operational policies, the FSCA is fostering a safe and transparent environment for crypto trading. This is crucial in a landscape where market abuse and operational risks are potential concerns.

In addition to the licensing process, the FSCA conducted due diligence checks with other regulatory bodies, such as the Payments Association of South Africa and the Reserve Bank Financial Surveillance department. This collaborative approach enhances the regulatory framework and helps maintain the integrity of the financial system.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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