FSCA Classifies Crypto As A Financial Product In South Africa Regulated Through Special Regulations

South Africa's financial watchdog has classified cryptocurrency assets as financial products. (photo: dock. Pixabay)

JAKARTA - The South African financial watchdog has classified cryptocurrency assets as financial products. This announcement appeared in the government gazette on Wednesday, October 19. This makes cryptocurrencies now regulated in a law in the country.

In short notice, the Financial Sector Conduct Authority (FSCA) said crypto assets, referred to as "digital value representations", must be regulated in South Africa from the date of publication.

The regulations that the authorities say they will introduce include implementing foreign exchange controls and licensing crypto trading companies.

Financial watchdogs around the world have been grappling with how to regulate the new digital currency and token, the price of which has fallen since November last year.

Crypto assets are not issued by a central bank, but can be traded, transferred, or stored electronically.

South African Reserve Bank (SARB) Deputy Governor Kuben Naidoo told Reuters in May that regulation of crypto assets is imminent and may come into effect within the next nine to 15 months, after regulators said they intended to do so in November 2020.

He added that the SARB wants crypto asset regulation to prevent theft, money laundering and undermining monetary policy as ubiquitous cryptocurrencies can weaken central bank authority.

"This is the first legal step needed to bring the crypto asset industry into South Africa's legal framework," said Brent Petersen of Easy Crypto, a crypto buying and selling platform.

He added the declaration would apply to crypto trading platforms, as well as those providing advice or brokerage services to buyers and sellers of digital financial assets.