Over 60 Crypto Exchange Licenses to be Issued by South African Regulators

The African continent has been remarkably growing in terms of blockchain technology adoption. More countries are regulating the virtual asset and trading landscape, led by the Central African Republic, which was among the first countries to treat Bitcoin as a legal tender.

Nigeria and Kenya have also joined in and started regulating crypto exchange companies and custodial services. However, until last year, South Africa had a lot to catch up to become among the most crypto-friendly countries.

The state financial regulator introduced major reforms in 2023, setting the stage for the prolonged process of issuing a crypto exchange license in South Africa. Has the time come for companies to receive their license?

What Will Happen to Crypto Exchanges in South Africa?

In 2023, the Financial Sector Conduct Authority (FSCA) introduced major changes pertaining to virtual assets in South Africa, which aim to make the country the first one in the continent to issue a crypto exchange license.

Over 355 entities have submitted their applications to receive a license for crypto exchange by the issued deadline of November 30th 2023. around 260 applications are being considered, while 60 entities are said to receive their license by mid-March 2024. 

The state regulator intended to create an independent body to regulate and oversee the licensing of crypto exchanges in South Africa. However, the work on this has yet to be finalised.

This step comes in time with the increasing demand for digital assets during the crypto market boom and the increasing pressure by investors and companies who serve a large base of crypto enthusiasts in the region.

Crypto Exchange License Regulations in South Africa

The initiation of the South Africa crypto license aims to put the country ahead of its regional peers and make it one of the most crypto-friendly countries in Africa and the world.

The FSCA will currently oversee the licensing process, which is intended to protect consumers, boost investors’ confidence and create an enforcement guideline that combats illegal businesses. 

Crypto companies welcomed this step, while others were concerned about the hefty fines that were introduced without clear-cut guidelines on the registration fees, code of conduct, or regulatory body.

Crypto exchanges that have not applied for a license beyond the said deadline are subject to a whopping 10,000,000 Rands, which equals over $500,000 and 10 years imprisonment.

The current regulations require companies to register at the FSCA and continue their exchange service while their application is approved.

The cost of a crypto exchange license for sale in South Africa is only determined by an application fee, without clarifications regarding the required shared capital or annual/supervision fees. Applicants must pay a variable fee ranging from $130 to $2,400, depending on the business type and license category.

Conclusion

South African financial regulators have introduced a new process to become the first country to grant a crypto exchange license in the continent. This comes after the FSCA required crypto companies to register with the state regulator by November 30th, 2023.

Around 60 applicants from 355 are expected to receive their crypto license in March 2024, while the rest await the decision after a prolonged process to ensure companies behave in good faith and contribute to the local financial growth.