South Africa Initiates Crypto Exchange Licensing Amid Surge in Applications

With the deadline for submissions set before November 30, further approvals are expected. According to Reuters, the South African Financial Sector Conduct Authority (FSCA) has approved 59 license applications from digital currency platforms, which will be regulated under current law. Citing Felicity Mabaso, an FSCA director, Reuters reported that the FSCA has 262 crypto exchange license applications under process out of a total of 355 applicants, with 59 approvals granted on March 12. Bloomberg stated that crypto companies had applied under the deadline of November 30, 2023, and would be regulated under the Financial Advisory and Intermediary Services (FAIS) Act.

This act introduces new customer protections and allows regulators to take enforcement actions. It also enables the South African Reserve Bank (SARB) to perform oversight. FSCA Commissioner Unathi Kamlana told Bloomberg that during the licensing and monitoring process, gaps might be identified that the current regulatory framework, the FAIS Act, may not address, necessitating further development as these gaps are recognized. South Africa reportedly becomes the first African country to issue crypto exchange licenses when it initiated the regulatory process in 2021, considering a separate legal framework for cryptocurrencies. SARB later announced in the same year that digital currencies would be declared as financial assets rather than currency in regulations to be published in 2023, eventually designating them as financial products by the FSCA. In July, the FSCA Commission reported receiving 20 applications before the November deadline, stating that crypto exchanges operating without a license after the deadline would be subject to enforcement actions such as fines and closure. In December, the FSCA announced it had received 128 applications, with 72 of them to be reviewed between December and March 14. In February, the National Treasury of South Africa stated in its annual budget review that it would implement a policy change to include stablecoins in the definition of crypto assets.