Increased interest in crypto has led South African regulators to establish that they will be considered as financial products.
As interest in cryptology increases, South African regulators see the need to establish clear regulations for cryptology.
Thus, the South African financial regulator published a draft declaration of crypto assets as financial products.
Certainly this year we have noticed a significant increase in the adoption and use of cryptomontages. However, South Africa is among the last to make such efforts.
Thus, South Africa’s efforts follow a strong interest among retail investors in crypto.
In this regard, the Financial Sector Conduct Authority (FSCA) announced the publication of „a draft declaration of crypto assets as a financial product under the Financial Intermediation and Advisory Services Act“.
Therefore, the draft incorporates some recommendations for the regulation of crypto currencies as a financial product under the FAIS Act.
„Any person providing advice or intermediation services in relation to crypto … must be licensed under the FAIS Act as a financial service provider and must comply with the requirements …“, the publication noted.
That is, providers of crypto services, including crypto exchanges like Bitcoin Rush, will have to register with the FSCA as service providers.
Positive or negative regulation?
Many in the crypto community see regulation as a necessary step towards adoption. However, we must also take into account that this will depend on the type of regulation.
The type of regulation that is excessive and suffocating is bound to die or wipe out the sector.
Therefore, every time we talk about regulation, fear permeates the environment.
Thus, according to the publication, the draft will serve as an „intermediate step“ in mitigating certain immediate risks in the environment; especially pending further development by the country’s Active Crypto Regulatory Working Group which will obviously affect South Africa’s future crypto policies.
The financial regulator also clarified that „the draft … in no way impacts the status of crypto assets in the context of other legislation. Nor does it attempt to regulate, legitimise or give credit to crypto currencies“.
In addition, the FSCA is open to comments on the draft from interested parties until 28 January 2021.