The Financial Sector Conduct Authority (FSCA), a market conduct regulator of financial institutions in South Africa, announced on Wednesday that the country has declared crypto assets as financial products in the jurisdiction.

In a gazette notice published Wednesday, the Financial Sector Conduct Authority defined crypto assets as “a digital representation of value” that is not issued by a central bank, but can be traded, transferred or stored electronically “for payment purposes.” , investment”. and other forms of utility.”

The regulator said the move is aimed at making it easier for local regulators to control the market and help protect users.

The change is effective immediately and is governed by the Financial Advisory and Brokerage Services Act 2022. The announcement is the first legal step that was required to bring the crypto sector within the South African legal framework.

In July, the South African Reserve Bank (SARB) announced the central bank’s plans to adopt legislation to classify and regulate crypto assets as financial assets to balance innovation and investor safety. During that time, Kuben Naidoo, deputy governor of the South African Reserve Bank (SARB), said that the regulations were not intended to recognize cryptocurrencies as a payment method, but rather as a financial instrument that can also be used in the mainstream sector.

Under the proposed regulation, a person offering advice on crypto assets will need to be licensed as a financial services provider and meet the relevant requirements of both the FSCA and the country’s Financial Intelligence Center (FIC). This is intended to ensure proper monitoring, reporting and oversight by the FSCA and the FIC generally of crypto asset transactions.

In August, the South African central bank formally advised local commercial banks to work with crypto exchanges/crypto asset service providers (CASPs). In the past, some local banks were unwilling to offer banking services to digital asset providers.

In a bid to prevent financial crimes and illicit activities associated with crypto asset transactions, the central bank also announced plans to develop a regulatory framework for crypto exchanges and platforms to allow crypto trading. The plan would also include compliance with know-your-customer (KYC) protocols and tax and exchange control requirements. It appears that the regulations proposed by South Africa are consistent with the proposals being developed by other central banks and regulators in the international market.

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