South Africa’s FSCA receives 138 crypto license applications

The Financial Sector Conduct Authority (FSCA) of South Africa is currently processing a slew of applications from cryptocurrency companies seeking operational licenses.

The move reportedly marks a critical juncture in the country’s approach to digital asset regulation.

According to reports from local media, the FSCA has received 138 proposals from firms looking to be licensed as crypto asset service providers (CASP). This month, the regulator will begin its review, focusing on a subset of 36 applications.

The FSCA said its approach to evaluation is grounded in principles of market participation, consumer protection, and risk management. This rigorous process aims to identify firms that are not only compliant but also equipped to contribute positively to the digital asset sector in South Africa.

Meanwhile, the regulator had a big influx of applications towards the end of the submission period, with 93 applications received in October and a total of 128 by November 30, the deadline for submissions. However, 19 applications were withdrawn, largely due to issues such as lack of experience and inadequate operational frameworks.

The government’s scrutiny extends to the range and quality of services offered by these companies. Special attention is being given to tools that support the broader market, including payment and custodial services. This focus is part of a larger strategy to ensure safe investment options for South Africa’s growing number of digital asset users, it said.

A key aspect of the assessment will be how these companies handle internal regulation, including Know Your Customer (KYC) protocols. Other factors like conflict of interest, disclosure practices, and cyber risk management will also be under the microscope.

This initiative follows a recent study by the FSCA, highlighting a spike in monthly transaction volumes in the country’s crypto market, reaching a total of ZAR 8 billion.

The FSCA’s next steps involve a phased review of the applications, with 36 crypto firm assessments scheduled for discussion at the Licensing Executive meeting on December 12. Further reviews of 22 firm applications are set for February 13, 2024, with the remainder to follow.