South Africa’s Financial Sector Conduct Authority (FSCA) recently announced that they have granted crypto licenses to 75 institutions. This confirmation comes after a number of crypto businesses claimed to be the sole entities to receive such licenses. It is important to note that these licenses are issued under the Financial Advisory and Intermediary Services (FAIS) Act specifically for crypto asset service providers (CASPs). The FSCA’s powers are limited to the authorization and supervision of CASPs in relation to financial services that involve crypto assets, as defined in the FAIS Act.
The services that these licensed entities can provide include advice, intermediary services, and investment management services related to crypto assets. It is crucial to understand that while these licenses are significant, they do not imply recognition of crypto assets as legal tender. The South African Reserve Bank currently does not recognize crypto assets as currency, according to the FSCA. This clarification is important to prevent any misconceptions regarding the status of crypto assets in the country.
Among the notable entities that have received crypto licenses in South Africa are Luno, Altcoin Trader, and VALR, among others. It is worth mentioning that the country received a substantial number of applications from CASPs, totaling over 374. However, after a thorough two-year process, only 75 institutions have been granted licenses. The FSCA has assured that regular updates will be provided as more applications are reviewed and approved.
Interestingly, Binance, a prominent global crypto exchange, did not make the list of crypto license holders in South Africa. Despite establishing a local presence in the country in July 2022, Binance decided to halt certain services in order to comply with regulations. The FSCA had issued warnings about risks associated with engaging with the “Binance Group,” leading to the decision by Binance to cease operations in certain areas. It is important to note that Binance is not authorized to offer financial services or conduct business in South Africa, as the country does not currently regulate crypto-related investments.
New Cryptocurrency Taxes Imposed
In addition to the licensing situation, the South African Revenue Service (SARS) has introduced new taxes on cryptocurrencies, with rates potentially reaching up to 45%. This development underscores the growing regulatory scrutiny and measures being implemented in the crypto space in South Africa. It is crucial for individuals and entities involved in cryptocurrency transactions to stay informed about such regulatory changes and comply with the requirements set forth by the authorities.
Overall, South Africa’s approach towards regulating the crypto sector reflects a balance between fostering innovation and ensuring consumer protection and financial stability. The licensing process, exclusion of certain entities, and imposition of taxes all contribute to shaping the landscape of cryptocurrency operations in the country. As the regulatory environment continues to evolve, it is essential for stakeholders to stay vigilant and adapt to the changing dynamics of the crypto industry in South Africa.
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