The Financial Sector Conduct Authority (FSCA), South Africa’s monetary regulator, issued a statement on Oct. 19 stating that the country’s Financial Intermediation and Financial Advisory Services (FAIS) Act 2002 has been updated to include a definition of crypto-assets. Such a resolution has been expected for several months, and it regulates crypto assets in South Africa for the first time.
The FSCA document, which went into effect as soon as it was published in the Green Gazette (the official government gazette), states that a crypto asset is “a virtual representation of value” that can be exchanged, transferred and stored electronically but is not issued through a central bank. In addition, it “applies cryptographic techniques” and uses distributed ledger technology.
This is a historic moment for South Africa: today, the Financial Sector Conduct Authority (FSCA) declared a crypto asset as a monetary product under the FIT Act. This was published in the Official Journal and on the FSCA website.
According to the FIA, a monetary product is defined as a security, an obligation, “any for-profit tool” or a tool that confers rights on securities and tools. It can be submitted through domestic or international money service providers, licensed in South Africa. Registration can be “an expensive process,” according to local press reports.
Related: Freedom Day, Bitcoin Gives South Africans a Slice of Their Financial Future
A South African draft on crypto-assets was published in November 2020. In June 2021, a national executing organization created a roadmap for a regulatory framework. The regulation will help the country comply with anti-money laundering/know-your-customer (AML/KYC) and protect investors, however, the main points of AML/KYC needs have generated some controversy. In February 2022, South Africa’s National Treasury showed the goal of claiming cryptocurrency as a monetary commodity and improving the tracking and enforcement of crypto transactions. .
According to the Chainalysis Global Cryptocurrency Adoption Index 2022, in September, South Africa ranks 30th in the world for cryptocurrency adoption. Several estimates imply that around 10-13% of the South African population own cryptocurrencies.