SA crypto players upbeat over granting of licences

Sibahle Malinga
By Sibahle Malinga
Johannesburg, 22 Mar 2024
Altify CEO Sean Sanders and Luno country manager for SA Christo de Wit.
Altify CEO Sean Sanders and Luno country manager for SA Christo de Wit.

South Africa’s crypto-currency players believe the crypto licences recently approved by the Financial Sector Conduct Authority (FSCA) will promote greater adoption of the currency and boost investor confidence among institutions and the public.

This, after the financial regulator revealed last week during the FSCA Conference 2024 that it had approved 59 operating licences for crypto-currency operators in SA.

Crypto companies that wanted to continue operating in the country were obligated to apply for a licence with the FSCA from 1 June 2023.

Felicity Mabaso, divisional executive for licensing and the business centre at FSCA, said the regulator had received applications from over 300 crypto asset service providers (CASPs) since it set the ball rolling on the implementation of the crypto-asset reporting framework last year.

“Since 1 June, a total of 355 applications have been received to date and out of these, 308 had been received by 30 November. A total number of 47 applications were received from December to date and we have approved 59 applications. Approval happened on 12 March. There are always ongoing consultations with each and every application that we receive.”

About 262 applications are being processed and FSCA is informing all the recipients, she added.

Crypto firm Altify is one of the companies approved for licensing. Altify CEO Sean Sanders states: "The efforts made by the FSCA to regulate and license the provision of crypto assets in SA by crypto asset service providers marks a significant move towards the broader acceptance of crypto-currencies by retail and institutional investors worldwide.

“We at Altify applaud the FSCA for introducing a clear regulatory framework for CASPs in SA. This step ensures enhanced consumer protection and places the most industrialised African nation ahead of many other countries, including the US and Nigeria, which are yet to introduce official crypto-related regulations.”

Backed by the JSE-listed Sabvest investment group, Altify says it secured the operating licence through its subsidiary, RVX Capital, to offer crypto assets, among other financial products.

As the appetite for Bitcoin, Ethereum, Solana and other crypto-currencies grows in SA, mainstream financial entities are increasingly keen to include these assets in their portfolios.

Some countries − such as Singapore, the UAE and Poland − have taken advantage of the lack of clear crypto regulations over the last several years to attract world-leading crypto businesses. As a result, they have drawn well-paid and highly-skilled talent towards these markets, Sanders points out.

“This development aims to avoid the risk of falling behind forerunners and to tap into the highest-performing asset class of the past decade.”

Taking accountability

After years of saying it would not regulate the crypto-currency industry, the South African Reserve Bank (SARB) made a U-turn in 2022 and announced it was working to introduce a regulatory framework to govern crypto transactions.

Crypto assets are declared a financial product in SA under section one of the Financial Advisory and Intermediary Services Act No 37 of 2002 (FAIS Act).

Instead of drafting a separate regulatory framework for the crypto industry, SARB and regulatory partners regulate the industry under the FAIS Act.

Christo de Wit, Luno country manager for SA, believes including crypto assets under FAIS’s regulatory and licensing framework will create a myriad of opportunities in the local crypto industry.

The exchange has submitted its application to the FSCA and is awaiting approval.

“This regulatory and licensing framework is the start of a new chapter for our industry and we look forward to more institutional engagement and investment, bringing South Africans more ways to safely invest and enjoy the benefits of crypto assets,” comments De Wit.

A substantive regulatory framework on crypto assets will boost confidence among investors, institutions and the public, he adds.

Traditional institutions that are already licensed financial service providers will be able to include crypto assets in their offerings by adding the crypto assets category to their existing licences.

“Financial advisors can also advise their clients about responsible crypto asset investing.”

The licensing framework will ensure maximum protection for consumers and hold companies which don’t adhere to the laws accountable, states De Wit.