An historic moment for crypto in South Africa
From our CEO Farzam Ehsani: Yesterday, October 19, 2022, the Financial Sector Conduct Authority (FSCA) declared a crypto asset as a financial product under the FAIS Act. The declaration, published in the Government Gazette as well as the FSCA website, represents an historic moment for South Africa.
The reason for the declaration was cited as being due to the "mounting risk in the crypto asset environment" but it also looks as if this action was done to comply with a Financial Action Task Force (FATF) deadline for remediation of recommendations for South Africa. Importantly, the declaration states: "Recommendations not fully remediated or significantly progressed by October 2022 can lead South Africa to be placed on the FATF grey list, which could have materially negative consequences for the country as a whole."
South African crypto asset service providers (CASPs) like VALR can continue operating, but must:
Apply for a license under the FAIS Act between 1 June 2023 and 30 November 2023
Comply with "Fit and Proper", "Code of Conduct" and other requirements of licensed FSPs
Importantly, such CASPs must also "provide the FSCA with any information the FSCA requests that is in the possession of, or under the control of, the person, that is relevant to the financial services and/or similar activities rendered by such person."
There are some exemptions to this Declaration:
1) Miners
2) Node operators
3) NFTs and NFT platforms (at this stage)
Forward Focus
Overall this is a positive step for the crypto industry and South Africa in general. This declaration will open the door to many of the large traditional financial institutions (TradFi) in South Africa to start providing crypto products and services.
TradFi has been hesitant to enter crypto in South Africa because of the lack of regulatory clarity in SA. This has been said to me by nearly all of the TradFi players.
This declaration now provides much-needed regulatory clarity to grow the industry. We're still in the very early stages of understanding how crypto is going to transform the global financial system, and today's declaration is an important milestone in this journey. This day was always going to come. It is now here. I'm very excited to see what the future brings with it.
Note: This is an article form of a Twitter thread shared on October 19 2022
