South Africa’s financial regulator has issued a draft statement on crypto assets as financial products. The regulator said that South Africa has experienced “exponential growth in the provision and use of encrypted assets.”

South Africa’s encryption regulations

The South African Financial Sector Conduct Authority (FSCA) announced on Friday that it has issued a “draft statement on crypto assets as financial products” in accordance with the Financial Advisory and Intermediary Services Act. [FAIS]. ”Comments on the draft declaration can be submitted until January 28, 2021. The regulator wrote:

Globally, retail investors’ interest in buying crypto assets has grown rapidly. South Africa has also experienced exponential growth in the provision and use of encrypted assets.

The draft statement contains some recommendations on the supervision of cryptocurrencies as financial products under the FAIS Act based on the position paper issued by the Crypto Asset Supervision Working Group (CAR WG) this year.

The new rules apply to cryptocurrency service providers, including cryptocurrency exchanges, advisors and brokers. They will have to register with the FSCA as a financial service provider (FSP). FSCA detailed description:

The result of this statement is that anyone who provides advice on encrypted assets or provides intermediate services must be authorized as a financial service provider under the FAIS Law.

The financial regulator clarified: “The draft declaration will not affect the status of encrypted assets in the context of any other laws…and it will not attempt to supervise, legalize or give trust to encrypted assets.”

“The draft statement is only intended as a transitional step to mitigate some of the direct risks in the encrypted asset environment. It is a result of the current broader development of the Encrypted Asset Supervision Working Group (CAR WG), which will provide a basis for future policy interventions. Implemented in various regulatory agencies and laws.”

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