With the advent of several international laws governing and defining the crypto asset class, the South African financial watchdog Financial Sector Conduct Authority has categorized crypto assets as financial products. Based on a filing by the watchdog, this decided category for crypto assets was defined under the Financial Advisory and Intermediary Services Act.
In effect, this change will bring crypto assets under the attention of South Africa’s financial regulators and cause the regulation of the crypto ecosystem. The change has already taken effect and will entail applying foreign exchange controls and licensing crypto trading companies.
Attempting to clarify the meaning of a crypto asset, the document provided a couple of explanation which includes crypto assets – 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.
Crypto assets were also defined as a digital representation of value that applies cryptographic techniques and uses distributed ledger technology. Globally, regulators are seeking strategies to accelerate crypto regulations, especially now that the prices of many crypto assets have fallen and the rate of cyber theft has increased.
A few weeks ago, Francois Villeroy de Galhau, the Bank of France Governor called out to nations advising them to hasten their crypto regulatory process.
In the case of Villeroy de Galhau, “The so-called ‘crypto-winter’ is no reason for complacency or inaction.” The financial governor believes that a delay in the development of crypto regulation will expose the industry to arbitrage risks.
Villeroy de Galhau also talked about the risks of adopting contradictory and diverging regulations or even adopting the crypto regulation at a later date. He mentioned that “To do so would be to create an uneven playing field, risking arbitrage and cherry-picking.”
South Africa has shown a lot of prospects in terms of the crypto ecosystem, especially in Africa. Many have gone ahead to raise inquiries about the biodiversity hotspot country precisely checking if it will be the new frontier for cryptocurrency exchange.
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