The FSCA received 128 applications for crypto asset service provider licences by 30 November, the deadline anyone who, as a regular feature of their business, renders crypto asset financial services to submit their licence application to the Authority.
Unlicensed FSPs had to submit a full licence application, while already-licensed FSPs had to apply to include crypto assets under their existing licence.
People who continue to render crypto financial services after 30 November without having submitted a licence application will be regarded as conducting unauthorised or unregistered business. They will be guilty of an offence and on conviction may be held liable to a fine or imprisonment, or both, the FSCA said last month.
The Authority also reiterated that persons who submit their licence applications by 30 November can continue to operate until the licence application process has been completed and the licence has been finally approved or declined by the FSCA. Click here for more information about the conditions attached to the transitional arrangements.
In a briefing last week to provide an update on the licensing of crypto services, the FSCA said it had received 93 applications by 31 October. More applications had subsequently been submitted.
Diketso Mashigo, the head of the FSCA’s licensing department, said about 80% of the submissions were new applications.
Of the 93 applications, 19 (or 20%) were withdrawn for various reasons, including a lack of experience or inappropriate operational policies and procedures.
The FSCA provided the following timelines for the 74 licence applications that remain under consideration:
- 36 completed assessments will be presented at a meeting of the Licensing Executive Committee on 12 December;
- 22 applications pending for various reasons will be presented at the Licensing Executive Committee meeting on 13 February 2024; and
- 14 applications that have yet to be analysed will be presented at a meeting of the executive committee on 12 March 2024.
The timelines for two applications were not disclosed.
The FSCA said it considers several factors while analysing each prospective licensee. These include:
- The provider must be fit and proper in terms of the FAIS Act.
- The criticality of the market services
- Whether the provider offers multiple services.
- Whether the provider offers support services, such as custodial services and payments.
- The applicant’s operational policies and procedures, including Know Your Customer and Customer Identification and Verification processes and onboarding, client data protection, cyber risk management, conflict of interest management and resolution, complaints handling, and credit counterparty risk management.
- Applicants must pass due diligence checks with the Payments Association of South Africa and the South African Reserve Bank’s Financial Surveillance Department.
FSCA deputy commissioner Katherine Gibson told the briefing that the licensing regime will help South Africa to be taken off the Financial Action Task Force’s grey list.
“I think this work will be critical in helping South Africa get off the grey list. I know there are many pillars to that battle, but this is a really important one.”
Gibson advised retail consumers who invest in crypto assets to ensure that the FSP with which they conduct business is licensed and authorised by the FSCA. “If it is not, you run a really big risk of being scammed. That risk is amplified in the digital space, and we see so much of it in the crypto space as well,” she said.
