The Financial Sector Conduct Authority(FSCA) of South Africa has kickstarted the process of issuing crypto licenses to crypto firms and exchanges. With this process, the country is taking a huge leap forward concerning crypto regulation. The move also aligns with the agency’s vision to increase consumer protection and eliminate financial crimes like financial terrorism in the country’s crypto landscape.
South Africa’s FSCA awards licenses to Luno and Zignaly
Crypto exchange Luno and decentralized social marketplace Zignaly were part of the first set of firms that were awarded the license. Luno earned a crypto asset service provider license. Since its launch in 2013, Luno has been waxing stronger in the crypto sector making inroads into new regions and markets.
The exchange was awarded the license under the country’s Financial Advisory and Intermediary Act of 2022. The license will enable Luno to offer more products and introduce new features for its users in South Africa.
Zignaly was also awarded a license alongside Luno. The decentralized marketplace was granted a category 2 – Discretionary Financial Services Provider (FSP) license. With the license, the firm can manage investments and act as a custodian of funds for its users in South Africa.
The license is almost the same as the license award to financial institutions, buttressing how seriously the country is taking regulation in its crypto industry. Zignaly is also expected to comply with certain regulations that companies in the decentralized finance (DeFi) sector.
Impact on crypto firms and investors
South Africa started the process of licensing crypto firms in June 2023 after legislation that added crypto to the financial institution was passed. The FSCA is charged with ensuring the integrity of the financial system and protecting users. In the long run, around 60 crypto firms will be awarded several licenses.
The FSCA has also discussed the punishments, fines, and other penalties that would be imposed on firms operating without licenses. This firm position shows the agency’s commitment to ensuring a safe and regulated industry. The licensing of these firms also shows South Africa’s acceptance of the digital world.
The action has been predicted to woo more firms and investors into the country’s crypto exchange and promote innovation. Users will also be able to trade in a secure and safe environment. It is also an avenue for traditional financial institutions to dip their feet in the world of cryptocurrencies.
