South Africa’s Financial Sector Conduct Authority (FSCA) has issued 248 new licences to crypto asset service providers (Casps), marking a significant step in the country’s effort to regulate and legitimise the cryptocurrency industry. This surge in approvals comes amid bitcoin’s historic rise, breaching the $100,000 mark and trading at $104,000 (R1.86 million) earlier this week.
The FSCA introduced the Casp licensing framework as part of a broader strategy to combat fraudulent schemes like Mirror Trading International (MTI), which misled investors with false promises of 10% monthly returns. Additionally, the licensing regime aims to help South Africa meet international anti-money laundering standards and remove the country from the Financial Action Task Force grey list.
Since the Casp licensing process began in June last year, the FSCA has received 420 applications, approving 248 and rejecting nine. The remaining applications are still under consideration, while 106 were voluntarily withdrawn by applicants after discussions with the regulator.
New Entrants to the Market
One of the latest entrants to receive a licence is Afridax, a crypto exchange founded by Frank Leonette. The platform offers crypto wallet services tailored for everyday users while providing advanced trading functions via an API for experienced investors. Afridax is set to launch with 10 crypto assets, including the ZARP rand-backed stablecoin, and plans to expand its offerings in early 2025.
“We are here to build trust, drive adoption, and unlock the potential of cryptocurrency,” said Leonette, underscoring the company’s commitment to enhancing accessibility and fostering trust within the crypto ecosystem.
The platform also plans to offer staking and earning opportunities, aligning with the growing demand for diversified crypto investment products.
Challenges and Regulatory Progress
While the surge in licensing signals a growing recognition of cryptocurrency’s role in South Africa’s financial landscape, challenges remain. The FSCA reported that some applicants failed to meet the requirements of the Financial Advisory and Intermediary Services (Fais) Act, particularly in presenting clear business models and demonstrating expertise in crypto asset operations.
The regulator emphasised that rejected applicants or those who withdrew their applications are welcome to reapply if they meet the compliance standards. It also extended exemptions for Casps and key individuals from regulatory examination requirements until 30 June 2025.
Despite the progress, the FSCA clarified that its licensing powers are limited to overseeing financial services related to crypto assets under the Fais Act. Crypto assets are not recognised as legal tender by the South African Reserve Bank, maintaining their classification outside traditional currency systems.
As South Africa positions itself as a leader in crypto regulation on the continent, the FSCA’s actions signal a commitment to fostering innovation while protecting investors from risks associated with the rapidly evolving crypto market.
