South Africa’s first-ever digital asset licenses are imminent and will likely be issued this month, a top official at the country’s financial watchdog recently revealed.
Gerhard van Deventer, who heads divisional enforcement at the Financial Services Conduct Authority (FSCA), revealed in an interview that the watchdog should be issuing the VASP licenses any time now.
FSCA announced early last year that all VASPs in the country would be required to apply for a license as part of a new regulatory regime. The deadline for the applications was last November 30, 2023.
According to Van Deventer, the number of applicants by the deadline was 145.
“All in all, my colleagues in the licensing division tell me that we’ve received 145 applications. So, 50 of those were presented to the licensing committee in December. The results of those applications will be seen in the next few weeks,” he said.
The numbers Van Deventer revealed were higher than had been reported. According to local media, only 36 applications had been presented to the licensing committee in December. They had also put the total applications at 128.
Gerhard reiterated the FSCA’s warning that any company that failed to apply for the license or withdrew its application must shut down services immediately.
VASPs whose applications are under consideration “can carry on under certain conditions until they get the results of their applications.”
While the cost of licensing and the lack of blockchain expertise had been revealed as significant impediments for VASPs, Gerhard said that some companies withdrew applications as digital currency wasn’t their main business line. These applicants, mostly financial service providers, chose not to bear the extra burden of the new digital currency regime.
The new regulatory regime is geared toward protecting investors, says Gerhard. Previously, scammers would use the “we trade crypto” defense to avoid oversight by the FSCA.
“There’s nothing you can do now that doesn’t fall in our jurisdiction. That means that I can warn the public quicker about [potential crypto scams],” stated Gerhard.
South Africa is home to the two largest digital currency scams in Africa—Mirror Trading International (MTI) and Africrypt. The former was shut down in 2020 and targeted investors in the home country, the U.S. and European nations. The U.S. CFTC imposed $1.7 billion in restitution against MTI last year. Africrypt, a scam orchestrated by 19- and 21-year-old brothers, reportedly defrauded over $3 billion from South Africans.