South African Government Rejects Binance As Legitimate Digital Financial Service

Binance is now also not recognized by the South African government. (photo: binance doc)

JAKARTA - The South African government recently stated that Binance is not recognized as a legal digital financial service in its country. They also prohibit their citizens from trading with Binance.

In response to a warning from the South African Financial Sector Conduct Authority, major cryptocurrency exchange Binance said the warning was in line with local regulators. They also stated that they currently do not offer financial advice or brokerage services to South Africans.

In a Friday September 3 statement from Binance, the crypto exchange, implied a warning from the Financial Sector Conduct Authority, or FSCA, that it has no authority over the group and does not have the power to regulate “crypto-related investments” in South Africa.

The exchange also pushed back against allegations that South Africans used Binance's South African Telegram group to access services for crypto exchanges, saying the online community promoted blockchain education, but did not provide financial advice or services.

Although the FSCA is a South African government agency, Binance claims that the country's Center for Financial Intelligence is the “key regulator” with which it works to comply with local laws. According to the exchange, he has contacted the FSCA for clarification regarding the September 3 alert and to address potential concerns regulators may have regarding Binance.

“Binance.com is listed on the FIC as a voluntary self-disclosure agency,” the exchange said. “Binance complies with FIC Act obligations with regard to establishing and verifying client identities, recording and reporting suspicious or unusual transactions.”

In its warning, the FSCA urged the South African public to exercise caution in any investment involving the Binance Group, which it describes as an “international company” domiciled in the Seychelles. However, according to Binance's response, the company has no associated entity with that name in the island nation.

Recently South Africa's policy on crypto seemed particularly harsh, as local regulators announced that they would be re-evaluating their stance on digital assets.

The country's Intergovernmental Fintech Working Group said in July that it would lay the groundwork for a "phased and structured" cryptocurrency regulation in South Africa. However, the FSCA sometimes cites cryptocurrency fraud and financial risks to promote stricter regulations.

The FSCA warning comes after financial regulators in various countries said Binance's parent company or its affiliates were not authorized to provide certain financial services to their residents.

Authorities in Italy, Malaysia, Poland, Germany, United Kingdom, Cayman Islands, Thailand, Canada, Japan, and Singapore have issued statements warning investors to exercise caution with respect to Binance, or claim the exchange is operating illegally.