Market conduct regulator for financial institutions in South Africa, the Financial Sector Conduct Authority (FSCA), has through the Financial Advisory and Intermediary Services (FAIS) Act, declared that cryptocurrency assets will now be classified as financial products, effectively subjecting them to regulation.
But the FSCA further clarified that this do not portend that cryptocurrencies are now a legal tender in the African country.
The agency’s head of regulatory frameworks, Eugene Du Toit, at a press conference said:
“We are not legitimising crypto assets, We are not giving credence to crypto assets.”
The new declaration by FSCA now defines crypto assets as a digital representation of value that:
• is not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility;
• applies cryptographic techniques; and
• uses distributed ledger technology.
This is coming on the heels of a public consultation process that started after the FSCA published the draft Declaration of Crypto Assets as a Financial product bill in November 2020, a draft that has its publication having 22 different commentators sending ina total of 94 individual comments.
The agency also published a policy document that further explains the declaration’s effect, and this included transitional provisions, with the policy further detailing moves to establishing a regulatory and licensing framework applicable to Financial Services Providers (FSPs) that provide crypto asset services.
The transitional provisional arrangement states that without being licensed, a person my continue to to render crypto service assets, on the condition that he or she applied for a licencebetween June 1, 2023, and November 30, 2023.
The declaration further states that “…crypto asset miners and node operators performing functions in respect of the security and health of the network as well as persons rendering financial services in relation to non-fungible tokens will be exempted from abiding by the provisions of the FAIS Act.”
UnathiKamlana, head of the FSCA further noted that part of the mandates of the declaration was to enable authorities effectively mitigate against crypto scams and in the process protect customers, a power the agency did not previously have.
Ayoola Faseyi, an Abuja based Journalist with interest in Technology and Politics. He is a versatile writer with articles in many renowned News Journals.
He is the Co-Founder of media brand, The Vent Republic.
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