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South Africa now has over 100 licensed crypto asset service providers

Financial Sector Conduct Authority (FSCA) has received 383 crypto asset service provider (CASP) applications, with only five declined. The licensing process for new and existing CASP applications commenced on 1 June 2023, and existing institutions were given until 30 November 2023 to submit their license applications.  

Issuing of CASP licenses

FSCA says they had approved 63 license applications by 30 June 2024, which brought the total number of licensed CASPs in South Africa to 138. Out of the 383 applications which were received by FSCA, 80 applications were withdrawn by applicants following engagements with the FSCA on the appropriateness of their respective business and operating models. The remaining applications continue to be under consideration.

ALSO READ: Don’t get scammed: FSCA confirmed its list of crypo asset service providers

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Reasons for declined applications

FSCA says license applications were declined because applicants failed to meet the applicable fit and proper requirements under the Financial Advisory and Intermediary Services (FAIS) Act. Some of the requirements listed by FSCA are:

• Operational ability requirements: failure to provide clear and comprehensive business plans and business model descriptions outlining crypto asset activities and

• Competency requirements: failure or inability to demonstrate the requisite knowledge and practical experience pertaining to crypto assets.

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Re-applications allowed

FSCA will in future welcome re-applications from institutions that have voluntarily withdrawn or those who have been declined. Re-applications will only be accepted provided they can demonstrate full and proper compliance with the applicable licensing requirements.

“In the meantime, they may not undertake any CASP-related activities as defined under the FAIS Act. Any institution or person found to be undertaking such activities without authorisation will be subject to regulatory action by the FSCA. This does not apply to those institutions or persons that submitted their licence application by 30 November 2023, and that are still awaiting the finalisation of their applications by the FSCA.”

ALSO READ: FSCA advances crypto regulation with 74 licence applications under review

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What are crypto assets?

They are defined as a digital representation of value that is not issued by a central bank but is capable of being traded, transferred, or stored electronically by natural and legal persons for the purpose of payment, investment, and other forms of utility; applies cryptographic techniques; and uses distributed ledger technology.

FSCA says the South African Reserve Bank does not currently recognise crypto assets as currency. “The FSCA will continue providing regular updates on the status of CASP licensing applications in the future.”

The full list of the 138 licensed CASPs may be accessed on the FSCA’s website at this link: Approved list of crypto asset service providers.

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By Tshehla Cornelius Koteli