South Africa Issues First Crypto Licenses

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  • South African authorities have started awarding their first tranche of crypto licenses 
  • Luno and Zignaly were among the 60 firms expected to be licensed by the end of April
  • The country has decided to regulate crypto within existing financial frameworks rather than wait for specific regulation

Crypto firms Luno and Zignaly are among the first to have been awarded crypto licenses by South African authorities, with 60 licenses slated to be granted by the end of the month. The Financial Sector Conduct Authority (FSCA) has started awarding the licenses a month after announcing plans to do so, with authorities preferring to oversee crypto companies within the existing financial framework rather than wait for crypto-specific regulations. Applicants are licensed in different categories depending on what services they offer and the types of assets they handle.

South Africa Looking Forward

South Africa’s push to regulate crypto entities followed legislation passed in June 2023 which brought the ecosystem within the FSCA’s purview, giving it the ability to issue hefty fines for non-compliant companies. The body announced last month that licenses would soon start being awarded, with around 60 firms anticipated to receive approval by the end of April. 

Among the first applicants to be awarded operational licenses were exchange platform Luno and decentralized social investing marketplace Zignaly, with the former receiving approval as a financial service provider under the Financial Advisory and Intermediary Services Act and the latter announcing that it has obtained a Category 2 – Discretionary Financial Service Provider (FSP) license.

South Africa’s regulatory approach underscores the benefits of utilizing existing frameworks to oversee crypto operations, with FSCA Commissioner Unathi Kamlana telling Bloomberg last month that the country couldn’t “wait for the Rolls-Royce kind of regulatory framework.” as a result, the FSCA is using the existing Financial Advisory and Intermediary Services Act, which focuses on the honesty, integrity, competency, and ability of all financial services providers under its so-called fit-and-proper requirements.

The move shows that South Africa recognizes that the crypto sector is not going away and is one of the growing number of countries choosing to regulate it rather than attempting to ban it.