A crypto regulatory storm is sweeping across the globe. With South Africa to license all crypto by the end of the year, the continent’s two biggest crypto players, Nigeria and South Africa have joined the ranks of crypto regulators. Crypto businesses will have until November 30 to apply. About 20 crypto businesses have already submitted applications. Anyone who continues to operate a crypto business past the end of the year without license will see their operations in South Africa shut down.
South Africa Crypto Regulator
Going forward, all crypto businesses within South Africa will fall under the thumb of the Financial Sector Conduct Authority. The head of the authority, Unathi Kamlana, noted that potential financial harm to customers brought about the decision to require crypto exchanges in the country to be licensed. The authority will introduce a regulatory framework for crypto businesses to follow. They expect to modify that framework as needed to protect customers of these businesses.
First African Nation to Require Digital Asset Exchange Licenses
South Africa has the continent’s most developed economy. Most of the continent’s crypto businesses started in South Africa. In all likelihood, other nations in Africa will follow South Africa’s lead. The action by the South African regulatory agency follows new EU regulatory rules to be rolled out over the next two years. Hong Kong followed suit just a month ago with rules for regulating crypto exchanges. The US is much slower in passing laws. But they are moving ahead rapidly with legal actions against crypto businesses in violation of laws regarding securities and commodities.
Crypto Trouble in South Africa
Actions being taken by the South African regulator are not just a matter of following the lead of the Europeans or anyone else. South Africa has seen some of the biggest crypto scams in the world with billions of dollars in crypto investments disappearing. 70,000 Bitcoin vanished from the Africrypt platform in 2021 and Mirror Trading International was guilty of fraudulent marketing on multiple levels. The financial authority is working with the South African Reserve Bank and National Treasury on specific crypto and fintech regulations.
Banking and Crypto in South Africa
In the US and elsewhere banks have generally avoided getting involved in cryptocurrencies. US regulators have commonly cautioned banks in this regard. However, in South Africa they are taking a different approach. Banks are being encouraged to deal with crypto businesses. South African regulators believe that by connecting their banking system to crypto businesses they will have a better picture of what is going on in crypto. They want to connect crypto more closely to the traditional financial sector and make it follow the same set of rules, This, they believe, will make it more transparent and less prone to fraud and mismanagement.
Educating the South African Public Is Part of the Plan
There will be more in South Africa in addition to making all crypto businesses be licensed and follow the same set of regulations. South African regulators plan to educate the public and make people aware of the risks native to the crypto sector. This aspect has been long in coming. For too long incessant hype regarding crypto has not been countered by common sense financial advice and information.
South Africa to License All Crypto – SlideShare Version