The Financial Sector Conduct Authority has made significant strides in regulating crypto asset service providers (CASPs) under the Financial Advisory and Intermediary Services Act.
Since the licensing process began on 1 June 2023, the FSCA has received a total of 420 CASP licence applications. Of these, 248 have been approved, while nine were declined.
Another 106 applications were voluntarily withdrawn after discussions with the FSCA, which assessed the suitability of the applicants’ business and operational models.
As of 10 December, 56 applications remain under consideration.
The FSCA says the reasons for declined applications primarily relate to non-compliance with the FAIS Act’s Fit and Proper Requirements.
Specifically, applicants failed to meet the operational ability criteria by not providing clear business plans or comprehensive descriptions of their crypto asset activities. Additionally, competency issues arose when applicants could not demonstrate the required knowledge or experience in the crypto asset sector.
According to the FSCA, institutions that withdrew their applications or had them declined may reapply, provided they can show full compliance with the licensing requirements. However, these entities are prohibited from engaging in any CASP-related activities until they are properly licensed.
The FSCA has warned that any unlicensed institution or individual engaging in such activities will face regulatory action, although those who submitted applications by the 30 November 2023 deadline and are awaiting decisions are exempt from this restriction.
Access the full list of licensed CASPs on the FSCA’s website here.
FSCA extends exemption for CASPs
For those who might have missed it, the FSCA announced an extension to the application of the Exemption Notice concerning CASPs and their key individuals in early November.
Read: Temporary RE exemption for crypto FSPs extended
Under FAIS Notice 25 of 2023, licensed CASPs and their key individuals were exempted from the regulatory examination requirements (REs) stipulated in Part 4 of Chapter 3 of the Determination of Fit and Proper Requirements (Board Notice 194 of 2017). This exemption, which was scheduled to expire on 11 November, has now been extended until 30 June next year.
This extension provides licensed CASPs additional time to comply with the REs, which are a necessary component of the FAIS Act’s fit and proper requirements.
If this requirement is not met by the deadline, the FSCA has warned that regulatory action could be taken, potentially leading to the suspension or withdrawal of the CASPs’ authorisation.
Access the Extended Exemption Notice here.
