OPINION | SA’s crypto providers now caught in the licensing net | Business

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South African regulators have now defined crypto as a financial asset, write Lerato Lamola-Oguntoye and Analisa Ndebele.debele

write Lerato Lamola-Oguntoye and Analisa Ndebele.Around the world, governments are moving ahead to regulate crypto assets. The South African Reserve Bank at first merely warned the public about the volatility of the crypto asset market, but South African regulators have now defined crypto as a financial asset under the Financial Advisory and Intermediary Services Act. The Financial Intelligence Centre Act also applies.

Financial services include providing advice in relation to financial products, i.e., investment advice, and an intermediary financial service, which is defined quite widely. A person who assists other individuals to buy, sell, manage, administer or service a crypto asset is providing a financial service and must hold an FSP licence. An individual trading crypto for their own account would not be an FSP.

Those providing services in relation to non-fungible tokens . NFTs are unique, based on the code that creates them. Although NFTs can be traded, the regulator considers they present a lesser risk than fungible tokens. Some people have argued that NFTs are the same as crypto assets, so in the next iteration of the FAIS Act, they may be required to have a licence.

We are currently in an exemption period under the FAIS Act. CASPs who are currently providing financial services in relation to crypto assets are exempt from the FAIS Act, as long as they apply during the application period of 1 June to 30 November 2023. This exemption continues until there is a formal response to their application .Schedule 1 of FICA defines CASPS as accountable institutions, which means they have to register with the FIC and fulfil ongoing compliance obligations.

 

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