South African financial service providers have been primed to offer cryptocurrency products and services to customers after regulatory amendments in the country.
This comes after South Africa’s Financial Sector Conduct Authority amended its financial advisory act from 2002 on Oct. 19, defining crypto assets in the country as financial products. Most importantly, the definition means that cryptocurrencies can now be offered by financial service providers, both domestic or international, given that they are licensed in South Africa.
South Africa already commands a growing number of retail cryptocurrency users estimated to include as many as six million individual users and investors. The country’s Reserve Bank has also taken a measured approach in its regulatory stance of the sector in an effort to ensure investor protection without hampering innovation.
Cointelegraph touched base with two prominent cryptocurrency exchanges in the country, with both Luno and VALR serving significant user bases in South Africa. The companies are well placed to offer insights into the latest regulatory move, given that they cater to both retail and institutional clients in the country.
VALR CEO Farzam Ehsani labeled the FSCA’s move as ‘good news for South Africa setting a path towards regulating crypto asset service providers in the country while ensuring ‘they are serving the public with integrity.’
Marius Reitz, Luno general manager for Africa, echoed these sentiments by highlighting the importance of regulatory clarity not only for investors but for financial service providers in the country:
“The licensing requirements that will flow from this classification will drive high standards in the industry, particularly in relation to consumer protection, with potential investors easily able to identify those providers that satisfy regulatory requirements.”
Reitz also flagged the key benefit, which now allows financial advisors to formally advise clients on cryptocurrency investments. Before the FSCA amended the definition of crypto assets, financial advisors were not permitted to give advice on unregulated investment opportunities.
“The regulatory framework paves the way for wider institutional adoption. How this plays out will depend on the ability of more traditional finance companies and even banks to be able to fully support this newly classified financial product.”
Chris Becker, cyber banking managing executive at Tyme Bank, also provided insights to…
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