South Africa Requires Cryptocurrency Exchanges to Obtain Licenses

The Financial Sector Conduct Authority (FSCA) of South Africa has announced that cryptocurrency exchanges operating in the country will need to obtain licenses by the end of this year in order to continue providing services to South African residents.

According to a Bloomberg report https://www.bloomberg.com/news/articles/2023-07-04/south-africa-to-require-crypto-exchanges-licensing-by-year-end

Commissioner Unathi Kamlana revealed that the regulator has already received 20 license applications since the application process opened, and they expect more to come in before the November 30th deadline. Cryptocurrency exchanges that operate without the required license will either have to cease operations or face penalties. Kamlana stated that this measure is aimed at safeguarding customers.

“There is potentially serious harm to financial customers when using crypto products, and therefore it makes sense for us to introduce the regulatory framework. Time will tell the effectiveness of our measures, and we will continue to work together with the industry to refine and make changes where and if necessary.”

This development makes South Africa the first country in Africa to implement such licensing requirements for cryptocurrency exchanges. It aligns with the global trend of tightening regulations surrounding digital assets, as governments worldwide seek to establish stricter guidelines in the cryptocurrency space.

Which cryptocurrency exchanges will be affected in South Africa?

The new licensing requirement will impact several cryptocurrency exchanges that were established and operate within South Africa. This includes leading platforms such as Luno, which also provides services in the UK, as well as Revix and VALYR. Other platforms, including Binance, which have a global presence but operate in South Africa, will also need to obtain licenses to continue offering their services.

According to an FSCA representative, individuals engaged in providing financial services related to cryptocurrency assets, such as trading, buying, and selling Bitcoin (BTC), will need to seek authorization from the regulatory authority. However, there may be exceptions for certain service providers, such as crypto miners and NFT platforms.