The South Africa Government has requested that all Bitcoin exchanges in the country must obtain licenses before the end of the year.
South Africa’s financial watchdog, the Financial Sector Conduct Authority (FSCA), which is in charge of overseeing the country’s finances, sent out the warning.
Some weeks ago, there were reports about the new licencing rule for crypto exchanges in the country. According to the regulator, this was needed because of the chaos caused by several crypto scams that have rocked the country.
South Africa’s FSCA allows these crypto businesses to operate legally. Major global lawmakers resolved to shield clients from crypto’s uproar after previous crypto scandals left many unprotected users with bitter regrets.
Since the news broke, more than 20 licence applications have been sent in, the regulator said. In an interview, FSCA Commissioner Unathi Kamlana said that the group thinks more applications will be sent in before November 30, 2023, which is the limit for applications.
According to him, the association is very concerned about this because customers who use platforms without a licence for their cryptocurrency trading services could suffer harm. He made this statement in an interview with Bloomberg. SA understands the risks of unregulated cryptocurrency exchanges as a hub for most African platforms.
Crypto products can hurt bank clients, so we need a regulatory framework. We will engage with the industry to refine it and make modifications as needed. Time will tell if our measures work.
Thus, a licence is needed to protect South Africans using bitcoin platforms. This licencing requirement shows that SA is serious about regulating its fast-changing crypto sector.
Read also: 10 Best Bitcoin Wallets in Nigeria (Updated 2022)
If crypto firms don’t licence, what happens?
Licence refusal could result in serious consequences. If a cryptocurrency company doesn’t sign up by November, it can still do business. The notice said that the people who ran it could get a fine of 10 million South African rands ($511,000) or 10 years in jail, or both.
Binance, Luno, and Pantera Capital-backed VALR are all based in South Africa. Before the date, these businesses need to get licences. South Africa saw several crypto scams that cost billions of dollars.
The National Treasury and the South African Reserve Bank are part of an “inter-governmental fintech working group” that is working with the FSCA to oversee crypto.
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Crypto regulation across the globe
After a rough year last year, countries all over the world have started to pay close attention to how they regulate their crypto markets in the last couple of months.
After the crypto epidemic of last year, which caused many crashes and bankruptcies, regulators and lawmakers have agreed to tighten the rules for the crypto sector. When FTX went down, people paid more attention to cryptocurrency exchanges and companies.
Because of this, it’s not surprising that South Africa is going in the same direction. The fight to make sure the crypto market is safe is on, and any coin exchange with any sense knows it must follow these rules to stay in business.