South Africa is positioning itself as the first-mover in Africa’s cryptocurrency landscape by preparing to grant licenses to approximately 60 crypto platforms by the end of March 2024. This landmark move would make South Africa one of the first nations on the continent to require digital asset exchanges to obtain operating permits.

The decision to regulate cryptocurrencies as financial products follows a series of high-profile crypto scams in South Africa, which resulted in the loss of billions of dollars. As digital currencies have transitioned from the fringes of the finance world to the mainstream, the need for regulatory oversight has become increasingly apparent.

The Financial Sector Conduct Authority (FSCA), the regulatory body overseeing the licensing process, has been inundated with over 300 applications from crypto asset providers seeking approval. According to FSCA Commissioner Unathi Kamlana, the applications are being processed methodically in phases due to the overwhelming volume.

Kamlana revealed that rather than developing a new regulatory framework specifically for cryptocurrencies, the FSCA has opted to bring crypto exchanges under the purview of the existing Financial Advisory and Intermediary Services (FAIS) Act. This legislation focuses on ensuring the honesty, integrity, and competence of all financial services providers through rigorous “fit-and-proper” requirements.

The licensing period, which ran from June 1 to November 30, 2023, allowed existing crypto platforms to continue operating while aligning themselves with the new compliance checks. However, failure to obtain a license by the deadline could result in enforcement action by the FSCA.