The country’s financial conduct regulator said on Thursday that cryptocurrency financial companies in South Africa must apply for a license between June 1 and November 20, 2023, to operate legally.
An announcement on Wednesday that crypto assets are financial products does not mean they are legal tender, Eugene Du Toit, head of the Financial Sector Conduct Authority’s regulatory framework department, said at a news conference.
“We are not legalizing crypto assets,” Du Toit said. “We are not crediting crypto assets.”
Financial watchdogs around the world are grappling with how to control the growing number of digital cryptocurrencies and tokens whose prices have plummeted since November last year.
Unti Kamalana, the head of the regulator, said that the FCSA deliberately referred to crypto assets rather than cryptocurrencies, as the regulators do not consider digital assets to be eligible as currencies.
Declaring that crypto assets are financial products would enable authorities to crack down on scams and protect customers while they previously had no power to do so, he said.
The announcement and further regulations to follow could help South Africa avoid being graylisted by the global watchdog Financial Action Task Force – its governance against terrorism financing and money laundering has flaws, regulators said. he said.
The governor of South Africa’s central bank said in August that the country was at risk of greylisting, which IMF researchers said last year reduces capital flows into the country by an average of 7.6% of GDP.
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