South Africa regulates cryptocurrency exchanges as crypto assets become financial products
The booming of crypto currency in South Africa, one of Africa's largest economy, has seen the nation's financial think tanks coming up with regulations which govern the trading of this new form of digital payment.
With effect from 19 October 2022, crypto assets have been recognized as a financial product under the Financial Advisory and Intermediary Act.
The growth of cryptocurrency trading in South Africa
Cryptocurrency trading in the country has grown in leaps and bounds as more civilians have embraced it’s pedigree. According to some media reports, daily crypto asset trading values in South Africa exceeded R2 billion for the first time in January 2021.
Cryptocurrency ownership in South Africa is below the global average of 15% but higher than countries like the United States (10%), Germany (8%), and the United Kingdom (6%).
What has necessitated this massive growth?
For the Financial Services Conduct Authority (FSCA), as economic activity, crypto-currency activities must be regulated under the Financial Advisory and Intermediary Services (FAIS) Act
Youth have been headlined as the majority crypto currency traders in the country. This is because they have embraced technology and all the digital transformations that it brings.
According to Finder.com’s latest Cryptocurrency Adoption Index, 48% of youth aged between 18-34 dominate crypto ownership in South Africa. Trading in cryptocurrency has also made it easy for South Africans bypass traditional banking services. A huge positive
Strict regulations in the pipeline
South Africa’s economic activity is governed by the Financial Sector Conduct Authority (FSCA). This means that the trading of crypto currency falls under regulatory jurisdiction of the FSCA. The FSCA has now divulged that all crypto activities must be regulated under the Financial Advisory and Intermediary Services Act (FAIS) Act.
This means that any individual who provides advice or intermediary services related to crypto assets, be authorised as a financial services provider or as representative of such a provider, with a deadline of 30th November 2023 to apply for such a licence.
Whilst regulation and government speculation regarding crypto is often seen as quite a negative interaction, in this case it has a much more positive connection. This could literally be projected as the booming of crypto trading in the country.
Will the regulations affect the great decoupling?
Being able to pay with stablecoins – a decentralised version of fiat currency – is a huge step in the right direction for the crypto industry, and for Britain to be at the forefront of this only adds to the good news
Whether it’s the Pandemic, the inflationary crisis, or the ongoing loadshedding in South Africa, we are living through a period of intense turmoil. The stage for The Great Decoupling is set. People are yet to see the benefits of a new decentralized system, the merits of privacy, self-sovereignty, and responsibility for one’s financial destiny.
The population at large sees the cracks that have formed in the current system but are too scared to act. So when dust from the financial mushroom cloud settles and our politicians are once again demanding bailouts, centralization, and control.
Being able to pay with stablecoins – a decentralised version of fiat currency – is a huge step in the right direction for the crypto industry, and for Britain to be at the forefront of this only adds to the good news.
Is South Africa ready to adopt cryptocurrency as an official currency?
In April 2022, Central African Republic announced high-profile cryptocurrency Bitcoin as an official currency. This made it the first African country and the second worldwide to do so. Could South Africa find itself aboard that this cruiseship? The chances are very high considering that the government is enforcing the FAIS Act.
