South Africa to Mandate Crypto Exchange Licenses by Year-End; Enforcement Action Planned for Non-Compliance
South Africa’s financial regulator, the Financial Sector Conduct Authority (FSCA), has announced that all crypto exchanges in the country must obtain licenses by the end of the year.
Since opening license applications a few weeks ago, the FSCA has already received approximately 20 applications, with more expected before the November 30 deadline. FSCA Commissioner Unathi Kamlana stated that enforcement action, including potential closure or fines, will be taken against firms that continue to operate without a license after the deadline.
The move aims to address potential harm to financial customers and establish a regulatory framework. Kamlana expressed the intention to collaborate with the industry for continuous improvement.
South Africa, the continent’s most developed economy, becomes the first African country to mandate licenses for digital asset exchanges. Notable exchanges originating from South Africa, such as Luno and VALR, will be required to obtain licenses. Even global platforms like Binance, operating in the country, will need to comply. Luno’s local unit manager, Christo de Wit, confirmed the submission of their license application and awaits feedback from the FSCA.
In recent years, South Africa has witnessed several major crypto scams resulting in the loss of billions of dollars. Notable cases include the disappearance of 70,000 Bitcoins from Africrypt, run by the Cajee brothers, and the fraudulent scheme Mirror Trading International Proprietary.
In response, the FSCA has actively engaged in crypto and fintech regulations, collaborating with the country’s major financial sector regulators and policymakers through an intergovernmental fintech working group.
While many South African lenders have refrained from providing banking services to crypto platforms due to associated risks, the central bank has urged them to reconsider, aiming to gain better visibility into the sector.
Kamlana emphasized that being part of the formal sector and under the regulation of a tightly regulated entity like a bank offers enhanced transparency and reassurance.
Additionally, measures are being implemented to protect consumers, including financial education and raising public awareness about cryptocurrency products.