Crypto-declared financial products subject to financial services law in South Africa
Unlicensed providers will be allowed to continue providing financial services related to crypto assets
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The Financial Sector Conduct Authority (FSCA) of South Africa has announced that crypto assets will now be classified as financial products. This means that these assets will be subject to regulation by the FSCA. Crypto assets are now officially regulated in South Africa. The Financial Sector Conduct Authority (FSCA) has classified them as 'a digital representation of value' and mandated that they be treated as financial products from the publication date.
According to the Green Gazette, a government official record stated by FSCA, a crypto asset is a digital representation of value that can be traded, transferred, and stored electronically. These assets use cryptography along with distributed ledger technology or blockchain.
The new notice declares crypto assets as financial products under the Financial Advisory and Intermediary Services Act, 2022. In South Africa, a financial product is a security debenture or money-making instrument. Financial service providers licensed in South Africa can offer access to crypto assets.
The Financial Sector Conduct Authority (FSCA) has published a final Declaration of Crypto Assets as a Financial product under the Financial Advisory and Intermediary Services (FAIS) Act. The Declaration was originally published as a draft on November 20, 2020, and the FSCA received different comments from 22 commentators. After reviewing the comments, the FSCA has published the final declaration in the Government Gazette and on the FSCA’s website. This declaration is important for regulating the offering of crypto asset products and services in South Africa and will help to protect consumers and promote fair market practices.
The national working group created a roadmap for a regulatory framework in June 2021, and in February 2022, South Africa's National Treasury confirmed its intention to declare crypto a financial product. This will enhance the monitoring and compliance of transactions.
