New Crypto Rules Unveiled In South Africa

The South African financial regulator has published a draft declaration of crypto assets as financial products. The regulator says South Africa has experienced “an exponential increase in the provision and use of crypto assets.”

South Africa’s Financial Sector Conduct Authority (FSCA) announced Friday that it has published “a draft declaration of crypto assets as a financial product under the Financial Advisory and Intermediary Services Act [FAIS].” Comments on the draft declaration can be submitted until Jan. 28, 2021. The regulator wrote:

Globally there is rapid growing interest by retail investors to purchase crypto assets. South Africa has also experienced an exponential increase in the provision and use of crypto assets.

The draft declaration incorporates some recommendations for the regulation of cryptocurrency as a financial product under the FAIS Act from a position paper published this year by the Crypto Assets Regulatory Working Group (CAR WG).

The new rules apply to cryptocurrency service providers, including crypto exchanges, advisors, and brokers. They will have to register with the FSCA as financial services providers (FSPs). The FSCA detailed:

The declaration would have the effect that any person furnishing advice or rendering intermediary services in relation to crypto assets must be authorised under the FAIS Act as a financial services provider.

The financial regulator clarified: “The draft declaration in no way impacts the status of crypto assets in the context of other laws … nor does it attempt to regulate, legitimize or give credence to crypto assets.”

“The draft declaration is merely intended to be an interim step in mitigating certain immediate risks in the crypto assets environment, pending the outcome of broader developments currently taking place through the Crypto Assets Regulatory Working Group (CAR WG), which will inform future policy interventions to be implemented across a variety of regulators and laws,” the FSCA described.