The Financial Sector Conduct Authority (FSCA), South Africa’s financial regulator, has published a brief notice stating that crypto assets would now be categorized as financial products, allowing them to be regulated. The statement heralds the start of the eagerly anticipated process of regulating digital currency assets. This change will closely align digital assets with the regulatory framework in South Africa. Many saw this as a win as consumer protection and AML/KYC compliance can finally gain more traction of enforcement.
FSCA classifies that crypto assets are “digital representation of value which 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 or other forms of utility.” This notice is effective immediately and is covered by the Financial Advisory and Intermediary Services Act of 2022. Currently, many government bodies around the world have started to work strictly in regulating cryptocurrencies.
Kuben Naidoo, a member of the Monetary Policy Committee and the current deputy governor of the South African Reserve Bank (SARB), stated:
“We are not intent on regulating it as a currency as you can’t walk into a shop and use it to buy something. Instead, our view has changed to regulating (cryptocurrencies) as financial assets. There is a need to regulate it and bring it into the mainstream, but in a way that balances the hype and with the investor protection that needs to be there.”
What Can We Expect in The Future of South Africa’s Crypto Sector
Overall, this can be seen as a positive step in the crypto industry. The implementation of said regulation could potentially welcome big financial firms to play a hand in providing crypto services. Crypto offering services would require proper licensing and compliance, providing much comfort to traders and users alike. Furthermore, this milestone could potentially influence other African countries in providing some form of regulation.
Following up on our previous industry news, we talked about different countries adopting stricter regulations. Financial giants are all getting involved in this hotcake of a cryptocurrency. The question that everyone had in mind currently is, how much influence do they need to create an impact in the crypto market? Could these regulations or acts effectively cut down frauds and tighten security? It would be a horrible sight to see if major financial firms became the victim of security leaks and hopefully that will never happen. In the meantime, what I can do is to provide you with the latest industry news to keep you updated! Check out our MEXC blog for more articles and start your crypto trading journey with MEXC!