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However, this initiative does not contemplate that crypto assets become legal tender, because they are not being legitimized by any government institution.
South Africa proclaims that crypto assets become financial products: what does this decision mean?
The South African Financial Sector Conduct Authority (FSCA) announced this Thursday that crypto assets traded in the African nation are now considered financial products, so they will now be regulated in an attempt to protect users from possible fraud and theft.
The measure, which is protected under the Financial Advisory and Brokerage Services Act (FAIS), provides that crypto asset service providers must apply to the South African authorities a license, between June 1 until 21 of November of next year, to be able to operate legally in the country.
The initiative was well received by some representatives of various cryptocurrency firms from South Africa and other countries . The CEO of the South African company VALR, Farzam Ehsani, specified that “this is a positive step for the crypto industry and South Africa in general”, since “this declaration will open the door for many of the large traditional “local” financial institutions to start to provide cryptographic products and services”.
For his part, the CEO of the New Zealand company Easy Crypto, Brent Petersen, pointed out that “this was the first legal step that was required to bring the crypto industry within the South African legal framework”.
It is not endorsed as legal tender
However, the person in charge of the regulatory frameworks of the FSCA, Eugene Du Toit, clarified that the resolution does not indicate that these crypto assets become legal tender. “We are not legitimizing crypto assets”, he stressed DuToit. On the other hand, the FSCA commissioner, Unathi Kamlana, highlighted that non-fungible tokens (NFT) are not considered in the agreement, since they are used as investments in traditional art. Likewise, he emphasized that the institution under his charge will continue to monitor the NFT market.
According to Reuters , citing South African regulators, this declaration, as well as the regulations that are intended to be implemented, could help the African nation not to be included in the gray list of the Financial Action Task Force (FATF), since there are currently indications in the country of deficiencies in the fight against money laundering and the financing of terrorist organizations.
Last May, the deputy governor of the South African Reserve Bank (SARB) declared that they were considering issuing a proposal to regulate crypto assets in order to prevent theft, money laundering and the deterioration of the country’s monetary policy, given that a universal cryptocurrency could weaken the authority of their body.
