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Cryptocurrency assets will be treated as financial products in South Africa under a recently published draft declaration by the country’s financial regulator, the Financial Sector Conduct Authority (FSCA). The move came after the country experienced an exponential rise in crypto assets usage.
On Friday, November 23, the FSCA announced that it has published a draft declaration which will treat cryptocurrency assets as a financial product under the Financial Advisory and Intermediary Services (FAIS) Act, Bitcoin.com reported. The regulator will be accepting comments and inputs on its proposal until January 28, 2021.
The regulator noted that, just like the rest of the world, there has been increased adoption of cryptocurrency assets in the country recently. “Globally there is rapid growing interest by retail investors to purchase crypto assets,” the FSCA wrote. “South Africa has also experienced an exponential increase in the provision and use of crypto assets.”
Once put into effect, this would mean that crypto firms will have to comply with FAIS Act requirements. Cryptocurrency exchanges, brokers, and advisors will need to be registered as financial services providers (FSPs) with the FSCA.
“The Declaration would have the effect that any person furnishing advice or rendering intermediary services in relation to crypto-assets must be authorized under the FAIS Act as a financial services provider, and must comply with the requirements of the FAIS Act,” the FSCA added, according to Coindesk. “This will include crypto-asset exchanges and platforms, as well as brokers and advisors.”
However, the draft will not impact other laws on cryptocurrency. “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 financial regulator explained.
As explained by the FSCA, the aim of the draft is to mitigate risks while the government is still formulating a more inclusive regulatory approach in the South African crypto industry. “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 regulator added.
