The South African government has officially classified cryptoassets* as a financial product. In a General Notice posted on the RSA government’s “Green Gazette”, the Commissioner of the FSCA, Unathi Kamlana, outlined that, “under the definition of “ financial products” as defined in section 1 of the Act, (the FSCA) hereby declares a crypto asset as a financial product for purpose of that definition.”
It’s a big step for South African financial and cryptoasset institutions alike. Primarily, it makes the industry “safer” for the South African consumer, because any cryptoasset service provider will now need to apply for a license under the FAIS Act (but will have until June 2023 to get their affairs in order in preparation for such an application).
Crypto companies running nefarious and unscrupulous operations will now be at much greater threat of law enforcement, because this declaration gives financial authorities the legal backing to charge such companies where necessary.
In addition to giving the FSCA and FIC legal armaments, the declaration will also open the door for traditional financial institutions to offer services to crypto companies. After ABSA and FNB withdrew from servicing crypto companies such as leading exchanges like VALR, Luno and AltCoinTrader, this declaration should reverse those positions and give these banks the confidence to provide such services once more.
Further to these services, the declaration technically opens the door for South African corporates to remit ZAR abroad for the purchase of digital assets using their corporate Excon allowance. Prior to this declaration, corporates were restricted from remitting ZAR offshore for the purchase of digital assets, and this could well change – subject to each service provider’s interpretation of the declaration.
Two of South African’s leading crypto exchanges AltCoinTrader and VALR were the first to comment on the big news, with VALR CEO Farzam Ehsani outlining a brilliant exposition on Twitter here:
This is an historic moment for South Africa:
Today the Financial Sector Conduct Authority (FSCA) declared a crypto asset as a financial product under the FAIS Act.
This Declaration was published in the Government Gazette as well as the FSCA website.
— Farzam Ehsani (@farzamehsani) October 19, 2022
AltCoinTrader CEO Richard de Sousa was the first to go to video with comment, providing an informative commentary on YouTube:
The full declaration, available on the RSA Government’s Green Gazette here and on the RSA Government Publisher’s website here reads as follows (SIC):
The Authority, under paragraph (h) of the definition of “ financial product” as defined in section 1 of the Act, hereby declares a crypto asset as a financial product for purpose of that definition.
Short title and commencement
(1) This Notice is called the Declaration of a crypto asset as a financial product under the Financial Advisory and Intermediary Services Act, 2022.
(2) This Declaration takes effect on the date of publication.
FINANCIAL SECTOR CONDUCT AUTHORITY
Global Crypto will report further as more news becomes available.
*Global Crypto will continue to refer to digital assets under the conjoined term “cryptoassets” until further notice. It is our opinion that based on the etymology of many conjunctions such as cryptocurrency and similar phrases, cryptoassets should be also a conjoined phrase. We recognise this may be a futile attempt at influencing the early history of a new term, but we can try.