Based on a review of crypto ownership in Africa by Equithy Senior Account Manager Noelle Oconnor, South Africa has among the highest rates of crypto users in the region. Currently, the continent is building one of the fastest-growing crypto markets worldwide. In 2021, crypto-related transactions hit a peak of $20 billion, and South Africa, Nigeria, and Kenya have the highest number of crypto users.
Data shows that over 5.8 million South Africans owned cryptocurrencies in 2021. And even though that number may have declined considering the recent collapse of US exchanges, there are still many crypto traders in the country.
Rather than taking a hard approach by banning digital assets, the South African government has been quite supportive. Cryptocurrency is legal in the country, and it has supported many people looking to diversify their investment portfolios. But to provide users with a safe regulatory framework, South Africa’s Reserve Bank has collaborated with the Financial Sector Conduct Authority to draft one.
Crypto Exchanges Required To Register By End of 2023
Equithy‘s Noelle Oconnor recently reviewed the upcoming regulations, and it requires crypto-related service providers, such as exchanges or trading platforms, to register themselves. The companies need to get a license and register themselves with the Financial Intelligence Center (FIC). Moreover, they need to meet certain requirements to prove that they can comply with counter-terrorist financing (CTF) and anti-money laundering regulations.
Currently, South Africa acknowledges cryptocurrencies as a financial product that acts as a digital representation of value. However, it’s not recognized as a legal tender by the reserve bank. Either way, businesses, and people can use cryptocurrencies for payment or investment purposes at their discretion.
The FSCA has mandated that all exchanges register themselves and get licensed by the end of the year. Companies that fail to meet this deadline and continue operations will be shut down or have to pay a fine. So far, the FSCA has gotten about 20 applications from crypto exchanges since it started accepting registrations.
The Benefit of Introducing Crypto Regulations in South Africa
The reason for these regulations is to protect users and investors. After all, people face serious financial risks when they use cryptocurrency products. As a result, it’s only best to have a suitable regulatory system in place.
In a statement, one regulatory official explained that the effectiveness of these measures will become clear with time and that they’re open to making changes where necessary. This will be a huge step for Africa’s crypto sector since most of the top crypto platforms in the continent are based in South Africa.
Equithy Senior Account Manager Noelle Oconnor predicted this change, as the need for better crypto regulation has increased since the collapse of projects like Celsius, FTX, and Terra. Many global regulators have provided their own version of rules to take control of the market. One example is that of EU lawmakers, which have implemented the Markets in Crypto Assets guidelines. Once South Africa passes clear guidelines for crypto firms, investors will feel more comfortable in gravitating towards cryptocurrencies.