Crypto Exchanges in South Africa Required To Get Licenses by End of 2023

South Africa’s Financial Sector Conduct Authority (FSCA), the country’s financial regulator, announced that all the crypto exchanges, operating in the country, have to obtain licenses by the end of the year, according to Cointelegraph. 

In this regard, Financial Sector Conduct Authority (FSCA) Commissioner Unathi Kamlana said the authority has received nearly 20 license applications since its recent opening, expecting more applications to come before the deadline which is on November 30. 

Kamlana pointed out that FSCA will take enforcement actions against crypto exchanges that will operate without a license after the deadline, including fines or the closure of non-compliant firms. He also asserted the importance of outlining a framework for regulating the crypto products in the country due to the potential risk of serious harm to financial customers. 

Moreover, he affirmed the necessity of giving time to see the impacts of the new measures and their effectiveness and do the required changes. 

FSCA’s move makes South Africa the first country in the continent to call on digital asset exchanges to obtain licenses as crypto regulators and policymakers worldwide continue to tighten crypto regulations. Therefore, global crypto exchanges like Binance, which is operating in the country, will need to obtain licenses this year. 

Earlier in November, the International Monetary Fund (IMF) called for more regulation of the crypto industry and greater consumer production in African countries, according to a blog published by the global financial institution.

IMF referred to policymakers’ concerns that cryptocurrencies could be used to illegally transfer funds out of Africa and get around local rules to prevent capital outflows. The blog said: “Widespread use of crypto could also undermine the effectiveness of the monetary policy, creating risks for financial and macroeconomic stability.”

Despite being one of the fastest-growing crypto markets in the world, Africa’s crypto market is still the smallest in terms of crypto transactions reaching $20 billion per month in mid-2021, according to Chainalysis. Africa’s crypto market increased in value by more than 1,200% between July 2020 and June 2021.

The blog mentioned that South Africa, Nigeria, and Kenya top the African continent in terms of the number of crypto users. It is worth mentioning that the Central African Republic is the first country in Africa to designate Bitcoin as a legal tender.