South Africa Classifies Cryptocurrency as Financial Products

The authority in South Africa in charge of regulating the market conduct of financial institutions, the FSCA has issued a draft declaration classifying crypto assets as a financial product.

November 22, 2020 | AtoZ Markets – The Financial Sector Supervisory Authority of South Africa (FSCA) has presented a draft regulation that would classify bitcoin and other cryptocurrencies as financial products.

South Africa unveils new crypto rules

The new cryptocurrency rules will apply to cryptocurrency service providers including exchanges, advisors, and brokers. To conduct business in the country, all of them will have to register as financial service providers.

Noting the growing interest in digital currencies, the regulator emphasized that the submitted document does not in any way affect the status of crypto assets in the context of other laws and does not aim to regulate or legitimize them.

“The draft regulation is only a temporary step aimed at reducing certain risks that are inherent in crypto-assets,” said the FSCA.

The regulator added that the document is being adopted pending other decisions that are being considered by the Working Group on the regulation of crypto assets.

Earlier this year, the Intergovernmental Fintech Working Group submitted a document stating that cryptocurrency cannot be legal tender in South Africa, and its use must be strictly controlled.

Will South Africa be the next big cryptocurrency destination?

Africa has recently seen increased cryptocurrency interest. In November 2019, Jack Dorsey, CEO of Twitter has set his sights on Africa. As AtoZMarkets reported, the CEO recently said that the continent will “define the future (especially the bitcoin one!). Not sure where yet, but I’ll be living here for 3-6 months mid-2020.”

Read also: Cryptocurrency Popularity in South Africa is on the Rise

According to a survey, there are around 1.25 million South Africans that possess cryptocurrencies. This, however, does not show how many of them are active traders. But seeing at the development overall, it does indicate that most of these people are HODLers. Should the crypto market show any signs of an upcoming bull run, South Africans would be able to contribute millions of dollars to the daily trading volume, with other African countries following suit.

It is important to note that South Africans are not the only ones heavily invested in cryptocurrencies. Nigeria and Ghana are well behind SA in terms of crypto trading. Therefore the continent of Africa is shaping to be one of the best crypto hubs for the future, the only thing required is to convince crypto companies to integrate into the region.

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