The South African Financial Sector Conduct Authority (FSCA), the watchdog for financial conduct in the country, has taken an important step in regulating cryptocurrencies by approving 59 licenses for crypto companies in one fell swoop.

The news was reported by local media on Thursday and marks a significant development in the adoption of digital assets within the country’s financial sector.

Cryptos are treated as regulated financial products

This breakthrough follows the regulator’s announcement in 2022 stating that cryptocurrencies should be treated as regulated financial products. The purpose of this is to protect users from the risks associated with digital assets and to prevent their use in activities such as money laundering and terrorist financing.

According to a report that appeared in local media on March 14, this approval of operating licenses positions South Africa as the leading jurisdiction on the African continent in crypto regulation. The newly implemented licensing regime for crypto companies gives the central bank’s Financial Surveillance Department explicit powers to authorize crypto trading platforms to report all transactions involving digital assets.

Many more applications are still pending

Felicity Mabaso, division director at the FSCA, explained that the 59 approved licenses are part of a total of 355 license applications submitted before the deadline of November 30 last year. With 262 applications still pending, the regulator expects to make further decisions soon.

South Africa had already started developing a specific framework for cryptocurrencies in 2021. The recent classification of digital currencies as financial products brings them under the Financial Advisory and Intermediary Services Act (FAIS), which sets new licensing requirements for crypto companies and provides customer protections.

Stablecoins, on the other hand, are exempt from this classification for the time being. However, the country is considering a policy change to include them under the definition of crypto assets, in an ongoing effort to strengthen the regulatory framework around digital currencies.


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