Global Courant
South Africa will require crypto exchanges in the country to operate with licenses by the end of the year, according to the country’s financial regulator.
The Financial Sector Conduct Authority has received about 20 applications since permits opened a few weeks ago, with more expected before the Nov. 30 deadline, FSCA Commissioner Unathi Kamlana said in an interview.
The regulator plans to take “enforcement action” that could result in the companies being shut down or fined if they continue to operate without a license past the deadline, Kamlana said.
“There is potentially serious harm to financial clients when using crypto products, so it makes sense for us to introduce the regulatory framework,” Kamlana said in Pretoria.
“Time will tell the effectiveness of our measures, and we will continue to work with the industry to make changes where and when necessary.”
Africa’s most developed economy is the first on the continent to require digital asset exchanges to obtain secure licenses. Several of the continent’s largest trading platforms sprang from South Africa, including Luno, owned by Barry Silbert’s Digital Currency Group, and Pantera-backed VALR.
Other global platforms such as Binance operate in the country and will need to obtain licenses.
Regulators and policymakers around the world have tightened regulations on the cryptocurrency sector following a series of corporate collapses that culminated in the bankruptcy of Bahamas-based exchange FTX.
In April, European lawmakers gave their final blessing to the EU Cryptoasset Markets, or MiCA, a law that will give the bloc its first rules for the crypto industry, while last month Hong Kong introduced new rules to license exchanges.
In recent years, South Africa has been the scene of several of the world’s largest crypto scams that resulted in the disappearance of billions of dollars in investments. This includes the disappearing 70,000 Bitcoin in 2021 from a platform called Africrypt that was run by the Cajee brothers and the fraudulent multilevel marketing scheme Mirror Trading International Proprietary.
The FSCA has been active on crypto and fintech regulation, working with an “intergovernmental fintech working group” that includes the country’s top financial industry regulators and policymakers, such as National Treasury and the South African Reserve Bank .
Part of the measures to protect consumers includes financial education and public awareness around cryptocurrency products, Kamlana said.
“It’s an area where you can lose quite a bit of money, so you should think twice before exposing yourself to it,” he added.
Read: Reserve Bank talks about ‘digital edge’ and crypto in South Africa
