BSC News

South Africa Set to Mandate Licensing for Crypto Exchanges by Year-End

Crypto exchanges operating without licenses after the deadline could face penalties, including potential closure or fines.

Leading the Regulatory Race in Africa

In a significant move, South Africa's financial regulator has announced that all cryptocurrency exchanges operating in the country must obtain licenses by the end of this year. The Financial Sector Conduct Authority (FSCA) disclosed that approximately 20 license applications have already been received since the licensing process commenced a few weeks ago. It is anticipated that more applications will be submitted before the November 30 deadline, according to FSCA Commissioner Unathi Kamlana.

Kamlana warned that if crypto exchanges continue to operate without obtaining licenses after the deadline, the FSCA will take enforcement action, which could result in their closure or imposition of fines. 

“There is potentially serious harm to financial customers when using crypto products, and therefore it makes sense for us to introduce the regulatory framework,” said Kamlana, while explaining the rationale behind the new regulatory framework.

South Africa has become the first country on the African continent to implement licensing requirements for digital asset exchanges. Prominent trading platforms like Luno, owned by Barry Silbert's Digital Currency Group, and Pantera-backed VALR have emerged from South Africa. Furthermore, global platforms including Binance, which operate in the country, will also need to secure licenses.

The FSCA has been actively collaborating with an intergovernmental fintech working group consisting of major financial sector regulators and policymakers, such as the National Treasury and the South African Reserve Bank, to develop regulations for the crypto and fintech sectors.

To protect consumers, the FSCA's measures include financial education initiatives and raising public awareness about cryptocurrency products. Kamlana emphasized the need for caution when engaging with cryptocurrencies, highlighting the potential financial risks involved.

As South Africa takes this regulatory step, the effectiveness of these measures will be closely monitored and adjustments will be made in collaboration with industry stakeholders if necessary.

Related News