In a statement, South Africa’s Financial Sector Conduct Authority (FSCA) said it has declared crypto assets as financial products under South Africa’s Financial Advisory and Intermediary Services Act, 2002 (“FAIS Act”).
The Financial Sector Conduct Authority of South Africa🇿🇦 has declared crypto assets as a Financial Product under the Financial Advisory and Intermediary Services (FAIS) Act, 2002 #Regulation #SouthAfrica pic.twitter.com/xyym4Mjn1Y
— BitKE (@BitcoinKE) October 21, 2022
CEO of VALR exchange, one of the largest crypto asset providers in South Africa, was one of the first to react to the declaration:
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
“A crypto asset is used as an investment vehicle… and how we are treating it at this stage is to say it resembles a financial product – you invest in it, you get returns from it, but now there are certain regulations that will apply.” – Eugene Du Toit, Head if Regulatory Frameworks Department, FSCA, told South Africa’s EyeWitness News.
FSCA first published a draft to regulate crypto assets in December 2020, and since then, a total of 94 individual comments on the draft declaration have been received from 22 different commentators.
According to the FSCA:
“To support a smooth transition into the FAIS framework, providers of financial services related to crypto assets are required to apply for the relevant license between 1 June 2023 and 30 November 2023, meaning that they have some time to prepare for this license application process and the more comprehensive regulatory regime.”
In addition to the declaration, FCSA said it was exempting practitioners in the crypto sector from section 7(1) of the FAIS Act which will let the player continue operations as they go through the application process.
“The transitional arrangements entail that a person may continue to render financial services in relation to crypto assets without being licensed, provided that such person applies for a license under the FAIS Act within the period specified.” – FSCA
However, some participants have been fully exempted from the FAIS Act. These participants include:
- Crypto asset miners
- Node operators performing functions in respect of the security and health of the network, and
- Persons only rendering financial services in relation to non-fungible tokens (NFTs)
Players offering services that concern crypto derivatives are not subject to the FCSA declaration.
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