As interest in cryptocurrencies increases, South African regulators see the need to establish clear regulations for crypto.
In this way, 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 cryptocurrencies. However, South Africa is among the latest to make such efforts.
In this way, South Africa’s efforts are based on the existence of a great interest among retail investors for 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 cryptocurrencies as a financial product under the FAIS Law.
«CAnyone who provides advice or brokerage services in relation to crypto... must be authorized under the FAIS Act as a provider of financial services and must meet the requirements…», the post noted.
That is, crypto service providers, including crypto exchanges, 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.
A type of excessive and suffocating regulation is destined to die or annihilate the sector.
Consequently, whenever regulations are discussed, fear permeates the atmosphere.
In this way, according to the publication, the draft will serve as an “intermediate step” in mitigating certain immediate risks in the environment; especially pending further developments from the country’s Crypto Asset Regulatory Working Group which will obviously affect South Africa’s future crypto policies.
Likewise, the financial regulator clarified that “The draft… in no way impacts the status of crypto assets in the context of other laws. Nor does it try to regulate, legitimize or give credit to cryptocurrencies.
In addition, the FSCA is open to receiving comments on the draft by interested parties until January 28, 2021.