Bringing some cheer amid the downturn in the crypto market, South Africa’s financial regulator classified crypto as a financial product. The declaration was made on 19 October when the Financial Sector Conduct Authority (FSCA) published a notice about crypto’s status in the country.
The notice stated that in accordance with the recent update in the region’s 2002 Financial Advisory and Financial Intermediary Services Act (FAIS), a definition for crypto assets is also added, making them a financial product.
The FSCA notice clarified that a crypto asset is a financial product on the basis of three parameters. It noted that crypto which is “a digital representation of value” is:
(a) 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;
(b) applies cryptographic techniques;
(c) uses distributed ledger technology.
South Africa has made rapid strides in its bid to emerge as the next crypto hub. Earlier this year, the South African Reserve Bank (SARB) changed its stance on crypto and deemed it to be a financial asset, seeking a regulatory framework for the digital assets. The deputy governor of the SARB, Kuben Naidoo said that the bank “has changed and we now regard [cryptocurrency] as a financial asset and we hope to regulate it as a financial asset. There has been a lot of money that has flowed in and there is a need to regulate it and bring it into the mainstream.”
In August, the central bank urged financial institutions in the region to indiscriminately serve crypto clients alongside mainstream customers.
According to the exclusive guidelines, financial institutions in the country “may act as a conduit for funds” tied to crypto asset service providers and “may play a role in customers wishing to purchase” or “receive payouts in fiat currency” in their bank accounts for the sale of crypto.