South Africa's primary financial regulatory body, the Financial Sector Conduct Authority (FSCA), recently examined a total of 128 applications from crypto service asset providers (CASPs). However, the FSCA plans to review and discuss only a fraction of these applications during its upcoming meeting in December. According to reports by My Broadband on November 30, the FSCA intends to address representations from 36 licensees in a meeting scheduled for December 12, while another 22 applications will be considered on February 13. The remaining 14 applications will await their review until March 12.
The fate of the applications not slated for review remains unclear, with the FSCA outlining its assessment criteria, which includes a comprehensive evaluation covering various aspects such as know-your-customer onboarding, data protection, cyber risk management, conflict of interest management, complaints handling, and credit counterparty risk management.
In addition to assessing these applications, the FSCA also released its "Cryptoasset Market Study 2023" on November 30. The study revealed that 60% of all cryptocurrencies traded in South Africa are categorized as "unbacked crypto assets." These unbacked assets comprise stablecoins (26% of the market share), non-fungible tokens (NFTs, accounting for 26% of the market share), and specific types of centrally issued tokens, making up 4% of the market share. Further insights from the study highlighted that the average annual revenue of South African crypto asset providers is between ZAR 1 and 50 million ($53,000 to $2.7 million), with only 8% of CASPs reporting revenues exceeding R100 million ($5.4 million).
The study also pinpointed that the highest monthly trading volume in the South African cryptocurrency market was recorded in November 2022, reaching over R8 billion (approximately $427 million).
In a move to regulate the industry, the FSCA issued a warning in July 2023, stipulating that any CASP operating in the country should acquire a license by the year's end. The regulatory body intends to take "enforcement action" against any non-licensed businesses post-deadline, which might include imposing fines or even shutting down operations.
