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The South African Government Declares Crypto Assets to be Financial Product

The South African Government Declares Crypto Assets to Be Financial Products.

According to a short notice published by South Africa’s financial watchdog, the Financial Sector Conduct Authority (FSCA), bitcoin assets are now considered financial products and can be regulated.

FINRA’s FAIS has now been amended to define crypto assets, which was expected for some time. As a result, in South Africa, cryptocurrencies will be regulated for the first time by their adoption.

What Changes Will This Bring?

The FSCA notice, published in Green Gazette, the official government publication, describes the use of crypto assets for trading, transferring, or storing electronic assets that are “not issued by a central bank but can be used to make payments, invest, or for other purposes, utilize cryptographic techniques, and utilize distributed ledger technology,” according to the FSCA notice.

A new notification is titled “Declaration of Crypto Assets as Financial Products under the Financial Advisory and Intermediary Services Act, 2022.”.

FSCA released a draft Declaration of Crypto Assets as a Financial Product under the FAIS Act for public discussion and study on November 20, 2020. Twenty-two commenters submitted 94 comments, and the FSCA published the final Declaration online after considering them all.

As of June 2021, a regulatory framework blueprint has been developed by a national working committee. Cryptocurrencies will become a financial instrument in South Africa in 2022, and regulatory oversight and compliance will be strengthened.

As part of the new rule, the FAIS Act does exclude several broad categories of service providers from section 7(1).

Several exemptions were created to allow current crypto asset activity providers to transition. In other words, a person may provide financial services related to crypto assets without license, provided they apply for a license within the designated period.

While their applications are being reviewed, unlicensed organizations can provide services without a license between November 30, 2022, and June 1, 2023.

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