South Africa has become the latest country to bring cryptocurrency into the financial assets segment.
The Financial Sector Conduct Authority (FSCA), South Africa’s financial regulator, on 19 October issued a notice that updates the Financial Advisory and Financial Intermediary Services Act (FAIS) 2002 to declare a crypto asset as a financial product.
The updated act defines a crypto asset as a digital representation of value not issued by a central bank. Such an asset can be traded, transferred, or stored. Employing cryptographic techniques, it uses distributed ledger technology (DLT).
The declaration took effect on the date of publication (19 October 2022).
South Africa’s journey towards crypto regulation
The move was being anticipated for quite a few months. It was in November 2020 that the FSCA published a draft declaration on crypto assets.
It noted the increasing usage of cryptocurrency and other virtual assets in the country and the need to regulate them. The declaration also underscored the need for crypto intermediaries to get registered with the regulator.
In June 2021, the Intergovernmental Fintech Working Group (IFWG) published a position paper that laid out a roadmap for introducing a regulatory framework for crypto assets. It also suggested ways to combat money laundering through the trading of crypto assets.
Rising crypto adoption
With this update, it is for the first time that cryptocurrency comes under regulation in South Africa. The country has witnessed increasing crypto adoption over the years.
As per a September 2020 report by Finder.com, South Africa ranks 18th among all the countries when it comes to crypto adoption.
Around 4.2 million residents of the country own crypto assets, with 49% of them owning Bitcoin.