South Africa declares crypto assets to be treated as Financial Product October 20, 2022
South Africa declares crypto assets to be treated as Financial Product <BR><BR>
South Africa declares crypto assets to be treated as Financial Product
*The announcement will help monitor financial products such as coins from a money laundering and terror-financing viewpoint.
*This step would aid clarity, user protection, and much-needed confidence in the ecosystem.
*Allow financial advisers to formally advise their clients on crypto investments.
The financial regulator of South Africa, the Financial Sector Conduct Authority FSCA, declared to bring providers of financial services in relation to crypto assets within the FSCA’s regulatory jurisdiction. The decision declared in a press release, published on 19 Oct, brings crypto assets under regulation for the first time in South Africa.
However, Eugene Du Toit, head of the Financial Sector Conduct Authority’s Regulatory Frameworks Department confirmed in a press conference that a declaration that crypto assets are financial products does not mean that they will work as legal tender, “ We are not legitimizing crypto assets, We are not giving credence to crypto assets.”
The notice, ‘Declaration of a Crypto Asset as a Financial Product Under the Financial Advisory And Intermediary Services Act,’ was published in a gazette notice on Wednesday. It defines “crypto asset” as a “digital representation of value that is not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility; applies cryptographic techniques; and uses distributed ledger technology.”
Marius Reitz, general manager for Africa at crypto platform Luno said, “The licensing requirements that will flow from this classification will drive high standards in the industry, particularly in relation to consumer protection, with potential investors easily able to identify those providers that satisfy regulatory requirements. Another key benefit is that it should allow financial advisers to formally advise their clients on crypto investments.”
The step has been taken to make it easier for regulators to regulate and monitor the crypto market and to secure the citizens from turbulent digital coins and fraudsters.
On Thursday, South Africa’s financial conduct regulator said that in order to regulate legally cryptocurrency financial companies can register for their license starting from 1 June 2023 to 20 November 2023.
In 2020, approx 15% of the South African population has already invested in Bitcoin, according to Global Web Index. The Bitcoin trading and networking company in South Africa, Mirror Trading International lost $1.2 billion as the growing crypto market collapsed last year.
The Reserve bank of South Africa has been finding out ways to easily monitor financial products such as coins from a money laundering and terror-financing viewpoint, also, working with other regulators to regulate and acknowledge digital coins as financial products.
Country head for cryptocurrency exchange Binance South Africa, Hannes Wessels, said “This step would aid clarity, user protection, and much-needed confidence in the ecosystem.”