The approval of the declaration was under the Financial Advisory and Intermediary Services (FAIS) Act of South Africa. Consequently, license requests by crypto asset service providers (CASP), including exchanges, must be made.
This Declaration Covers All Non-Central-Bank Digital Representations of Value
Recognizing cryptocurrency assets makes them valid financial instruments under the FAIS Act of South Africa. This was announced in a gazette that the South African government has recently published.
On October 19, the proclamation came into effect after receiving Unathi Kamlana’s assent. Unathi Kamlana is the Financial Sector Conduct Authority’s commissioner (FSCA).
This is an historic moment for South Africa:
Today the Financial Sector Conduct Authority (FSCA) declared a crypto asset as a financial product under the FAIS Act.
This Declaration was published in the Government Gazette as well as the FSCA website.
— Farzam Ehsani (@farzamehsani) October 19, 2022
This concept refers to any digital value representation. These values are exchangeable ones that the central bank did not create.
It also comprises natural and legal values that people may electronically transmit or keep. Finally, it includes values that serve practical, investment, or other functions.
Some members of South Africa’s cryptocurrency business have praised the statement.
Furthermore, the declaration came only a few months after Kuben Naidoo’s initial comment. Naidoo serves as the central bank of South Africa deputy governor.
He first claimed that his organization would treat cryptocurrency assets in the same way as financial commodities. If cryptocurrency assets assume such status, the South African Reserve Bank would then be empowered to regulate them.
Increased Danger in The Crypto Assets Market
Farzam Ehsani responded to the news by expressing his viewpoint on what, in his view, precipitated this action. The South African cryptocurrency trading platform Valr was founded and led by Ehsani.
In a tweet, he clarified that the declaration’s justification was the “growing danger in the crypto asset landscape.” However, he continued, saying that it seems [that] the declaration aimed to meet a deadline set by the Financial Action Task Force (FATF) for the remediation of recommendations for South Africa.
He emphasized that South Africa may be on the FATF’s grey list if the recommendations are not entirely implemented or considerably advanced by October 2022. He concluded that this might significantly harm the nation as a whole.
Ehsani listed a few of the consequences. One is the new application requirement for crypto asset service providers (CASP), which includes exchanges.
According to the FAIS Act, crypto asset service providers will seek a license via the application. The time frame for completing this is between June 1 and November 30, 2023.
Additionally, if the FSCA requests information, CASPs must provide it.
Regarding what the announcement implies for the sector, the CEO of Valr remarked that generally, this is a good move for the cryptocurrency sector and South Africa in general.
This Declaration will pave the way for several of South Africa’s major conventional financial institutions (TradFi) to begin offering cryptocurrency-related goods and services.
The announcement provides regulatory clarity, which has been absent, the CEO continued.