South Africa has one of the most increasing and swiftest growing crypto markets in the whole world. This is determined by several factors, such as popularity, activity, and engagement in the industry. Many predict a very bright future for South Africa as the crypto frontier in the region, and who knows this might soon come true.
The fact that crypto assets are becoming more and more popular across the nation is partly because of the OFT regulations and the full support from the governmental side, which indeed means a lot to the business sector and investors. The booming of the crypto assets began back in 2013 when the crisis in the country forced a lot of people to seek some new opportunities. Those opportunities turned out to be the cryptocurrencies, which ast the time were very quite new to the whole world. Whereas the booming period started in 2017.
Crypto Regulation in South Africa
The South African financial regulatory authority, commonly known as South Africa’s Financial Sector Conduct Authority or the FSCA made an announcement last week. The announcement said that the draft declaration of crypto assets as a financial product under the Financial Advisory and Intermediary Services (FAIS) was ready. This might mean several things. First, of all, the government is getting more responsible for market development, and second, that crypto is taken seriously in the country.
The declaration defining crypto assets as financial products was published for the first time ever officially. The regulatory authority also mentioned in the draft that the South African nation has experienced an exponential increase in the provision and usage of crypto assets extremely extensively especially during the past several years. This has led the authority to come up with the new regulations and to interfere in the market even more than before.
This is not the first time we see FSCA actively involved in the activity related to the financial situation of the country. The first very vivid case was with Forex trading when it began increasing in volume. The FSCA was the one to introduce the new regulations as soon as investments in Forex trading soared in the country. The definition of interference was as easy as creating a better landscape for the trading environment of the country. The amount of Forex brokers to trade within South Africa increased in that period drastically, and the majority of them are still operating very successfully. The same might happen with crypto assets and crypto providers.
Crypto in South Africa: amendments made right
The draft was published and soon after the comments and amendments were made to that. Further changes can be made until the 28th of January 2021. The final dot will be set by the end of January. The regulatory authorities also mentioned in the draft that the globally rapid growth of the popularity and engagement in the crypto market by retail investors has caused the consequent growth of the investment and interest in crypto in different countries, including South Africa.
Despite the fact that the declaration has only a draft version, for now, it might stand as a major advisor for the investors as well as for the financial authorities. The draft incorporates facts and points about crypto being a financial asset, yet the product is only regulated under the FAIS Act from a position paper, which was also published this year, yet a bit earlier. The paper was published by the Crypto Assets Regulatory Working Group (CAR WG).
With the change of the statement and defining crypto as a financial product of the nation, some of the rules and terms that apply to the financial products have also been amended. The rules also apply to cryptocurrency service providers. Those rules touch everyone, including crypto exchanges, advisors, and of course brokers, who tend to be the biggest players of the market.
The procedure for the brokerage companies is quite easy, yet might be time-consuming at some point. In order to have the right to trade in South Africa, a brokerage firm has to first register with the FSCA as a financial services provider. The FSCA has detailed all of the procedure rules and terms in their document. The declaration would have the effect that any person giving advice or providing intermediary services in relation to crypto-assets must be authorized under the FAIS Act as a financial services provider.
The main aim of the declaration is to clarify the role of the financial product and justify the crypto asset as a financial product in accordance and compliance with any local law. According to the regulators, there is no attempt in controlling the market via introducing certain laws and declarations, but instead, to give credence to the crypto assets.
The draft version of the declaration is the very basic step in creating a more sufficient and friendly crypto environment in the country. The outcomes may lead to the broader understanding and engagement of the crypto market, taking place through the Crypto Assets Regulatory Working Group (CAR WG). This is also the body responsible for informing all of the investors and companies about the changes and the amendments in the laws and regulations relative to the crypto industry.