South Africa’s financial regulator, The Financial Sector Conduct Authority (FSCA), has classified crypto-assets as financial instruments, effectively placing them under regulatory oversight. Publication Official Gazette dated October 20
It was a watershed moment for traditional financial institutions to start offering cryptocurrency services when FSCA Commissioner Unathi Kamlana signed the declaration into force.
This classification is added to the country’s existing Financial Advisory and Intermediary Services Act 2022. A crypto asset is defined as a “digital representation of value” that is not issued by a central bank and can be traded, transferred and stored for a purpose. of payments, investments, and other use cases.
According to the notice, crypto assets will be deployed via cryptographic means and distributed ledger technology, as opposed to central banks.
This also classifies crypto-assets as securities and shares the same treatment as company shares, debentures, liabilities, financial instruments, and evidence in the form of warrants or certificates granting the right to utilize securities. .
The update will also allow financial regulators to have standards to adhere to, particularly regarding consumer protection, and financial advisors will be permitted to advise clients on cryptocurrency investments. . Said In a statement emailed to Bloomberg.
CRYPTO ASSET SERVICE PROVIDER OBLIGATIONS
Cryptocurrency service providers are subject to a slew of new regulations that they must comply with in order to legally conduct business in the country. This includes requiring that individuals operating crypto asset services, during the application process to become a financial service provider, to demonstrate that they are a credible business entity and to demonstrate their good character, to the Government Gazette and Advisory Board. This includes requesting to be evaluated by the Board.
Financial services providers are licensed, but licenses can be suspended or revoked according to the terms of the FSCA.
We must also conduct audits and maintain complete and proper accounting records annually, including cash flow information, income statements, financial statements, monies, and assets held for our clients.