In a groundbreaking move, South Africa's regulatory body, the Financial Sector Conduct Authority (FSCA), has initiated the issuance of licences to crypto asset service providers (CASPs), paving the way for regulated operations within the crypto sphere. Legal firm Allen & Overy reports that as of March 31, 2024, approximately 60 licences have been granted, following the FSCA's approval of 59 licences earlier in the month. Notably, only two providers, namely Jaltech and Luno, have publicly announced their approval for a licence thus far.

Jaltech, among the first to secure a CASP license, expressed optimism about South Africa's alignment with global trends in crypto regulation. The FSCA's approval is viewed as a significant endorsement, potentially catalyzing institutional and retail adoption of crypto assets within the nation's financial sector.

The FSCA's decision to regulate crypto operators under the existing Financial Advisory and Intermediary Services Act rather than developing a separate framework underscores its commitment to overseeing these entities within the established regulatory framework. By subjecting crypto exchanges to the FAIS Act, consumers are afforded recourse and protections previously unavailable, with the regulator empowered to enforce compliance and address breaches effectively.

FSCA Commissioner Unathi Kamlana emphasized the phased approach to licensing, acknowledging the sheer volume of applications received. While recognizing the limitations of the existing regulatory framework, Kamlana affirmed the agency's commitment to refining regulations as needed, prioritizing consumer protection and market integrity.

Allen & Overy counsel Kelle Gagné hailed the FSCA's move as a testament to its acknowledgment of the reliance placed on crypto service providers by South Africans. Gagné outlined the rigorous requirements for obtaining and maintaining a CASP license, emphasizing the need for transparency, competency, and adherence to anti-money laundering regulations.

Despite the regulatory strides, concerns linger regarding the FSCA's responsiveness to inquiries, exemplified by the lack of feedback provided to MyBroadband's enquiry regarding the issuance of CASP licences. Nonetheless, the issuance of these licences represents a significant milestone in South Africa's crypto regulatory journey, fostering a more secure and transparent environment for crypto asset transactions.