South Africa is planning to license approximately 60 cryptocurrency platforms by the end of March. According to a report by Bloomberg, this initiative by the Financial Sector Conduct Authority (FSCA) underscores the nation's proactive approach towards regulating the burgeoning crypto sector.
The FSCA revealed that the response exceeded expectations, with more than 300 crypto-asset providers seeking regulatory approval. The deadline for application for the licenses is set for November 30.
Utilizing Existing Regulatory Frameworks
Rather than developing a standalone regulatory framework for crypto operators, the FSCA has opted to leverage the existing Financial Advisory and Intermediary Services Act. The regulator aims to bolster consumer protection and accountability within the sector by bringing crypto exchanges under the purview of this regulation .
Notably, the new guidelines offer a recourse in case of breaches or misconduct by the crypto platforms' operators. This regulatory oversight aims to instill confidence among investors and mitigate potential risks associated with crypto trading.
The Commissioner, Unathi Kamlana, acknowledged that while the regulation serves as a robust foundation for crypto oversight, ongoing supervision may reveal gaps that necessitate additional measures. As the FSCA continues to license and monitor crypto platforms, it remains open to refining regulatory frameworks to effectively address emerging challenges.
Last year, South Africa authorized all crypto exchanges operating within the country to register with the FSCA. Failure to comply with this directive could lead to enforcement actions, such as fines or business closure. The new regulations aim to safeguard investors from potential fraud and ensure greater accountability within the digital asset space.
South Africa Regulates Crypto
The directive from the FSCA affects major cryptocurrency exchanges like Binance, Coinbase, Kraken, and KuCoin, all of which are currently operating in the region. This move followed some reported cases of fraud, including the infamous Africrypt incident where Bitcoins worth $3.6 billion went missing due to alleged hacking.
Besides that, the FSCA's decision to tighten regulations is influenced by past investigations, such as the probe into Mirror Trading International (MTI), a cryptocurrency trading network operating in South Africa. Previously, the US Commodities and Futures Trading Commission sued MTI for its involvement in what was dubbed "the largest fraudulent scheme involving Bitcoin."
