South African regulators equate cryptocurrencies with financial products

What’s new? The Financial Sector Conduct Authority (FCA) of the Republic of South Africa has updated the Financial Advisory and Intermediary Services (FAIS) Act to include BTC and altcoins. Under the amendments, these assets are recognized as financial products. Farzam Ehsani, the co-founder and CEO of the VALR cryptocurrency exchange, reported this. The concept of a “crypto asset” includes all digital currencies issued by non-central banks and using cryptography. The notion of a “financial product” in South Africa implies any instrument for obtaining money, licensed providers can offer them.

This is an historic moment for South Africa:Today the Financial Sector Conduct Authority (FSCA) declared a crypto asset as a financial product under the FAIS Act.This Declaration was published in the Government Gazette as well as the FSCA website.— Farzam Ehsani (@farzamehsani) October 19, 2022

What else is known? The inclusion of new types of assets in the law is designed to protect the interests of South African investors. Ehsani believes that another reason was the need to comply with the recommendations of the Financial Action Task Force (FATF). The international body reported that if they were “not fully remediated or significantly progressed” by October 2022, the country could be placed on the FATF gray list, “which could have materially negative consequences for the country as a whole.”

Ehsani explained that South African crypto asset service providers (CASPs), such as the VALR exchange, can continue to operate, but are required under the FAIS to apply for a license between June 1 and November 30, 2023, as well as comply with all measures prescribed by law. In doing so, CASPs must provide any information about the financial services provided to the authorities upon request. According to Ehsani, at this stage exceptions are made for miners, validators, and NFT platforms.

The head of VALR believes that the amendments will bring clarity to the crypto sector and attract companies from the field of traditional finance

In February, the South African Treasury said that the inclusion of crypto asset service providers as accountable institutions in the Financial Intelligence Center (FIC) Act would be completed in 2022. The move to regulate CASPs comes as a result of South Africa’s attempts to address significant weaknesses in the country’s anti-money laundering and counter-terrorist financing systems.