Anyone who, as a regular feature of their business, renders financial services in relation to crypto assets has until the end of this month to submit their licence application to the FSCA.
People who continue to render financial services in relation to crypto assets after 30 November 2023 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 in a communication published at the end of last week.
The FSCA will also publicise the names of anyone found to be conducting unauthorised financial services activities in respect of crypto assets.
The licence application forms can be downloaded individually in pdf or Word format by going to www.fsca.co.za > Regulated entities > Licensing and registration > FAIS > New applications > Forms. Or click here to download the licence form pack as a single pdf. The pdf includes instructions on the application and submission process.
If you have queries about the licensing application process, fees, or the status of current applications, or need help with completing the application forms, contact the FSCA’s Licensing Department by emailing diketso.mashigo@fsca.co.za.
What the declaration as a financial product covers
In October 2022, the FSCA declared crypto assets a financial product (General Notice 1350 of 2022).
A “crypto asset” means a digital representation of value that:
- is not issued by a central bank, but is capable of being traded, transferred, or stored electronically by natural and legal persons for the purpose of payment, investment, and other forms of utility;
- applies cryptographic techniques; and
- uses distributed ledger technology.
Together with the declaration, the FSCA also provided:
- a general exemption of persons rendering financial services in relation to crypto assets from certain requirements (FSCA FAIS Notice 90 of 2022); and
- a draft exemption of particular persons rendering financial services in relation to crypto assets from certain requirements.
On 12 May 2023, the FSCA published FAIS Notice 25 of 2023, which finalised the exemptions relating to the General Code of Conduct (GCOC) and the Determination of Fit and Proper Requirements that apply to licensed crypto asset FSPs and their key individuals and representatives. Moonstone reported on the finalised exemptions here and here.
The general exemption placed crypto asset miners, node operators, and non-fungible token providers outside of the realm of the FAIS Act.
The FSCA stated that the declaration of crypto assets as a financial product does not apply to or affect services rendered in relation to crypto asset derivatives. These providers were already subject to the FAIS Act and the Financial Markets Act and are not subject to the exemption published in October 2022.
Conditions attached to the general exemption
The general exemption deals with the transitional arrangements for existing crypto asset FSPs.
One of the conditions of the general exemption is the submission of an application between 1 June and 30 November 2023 to render financial services in respect of crypto assets as defined in the declaration.
The general exemption for transitional purposes is also subject to compliance with:
- the personal qualities of honesty, integrity, and good standing;
- the general duty of the provider in terms of section 2 of the GCOC;
- all other provisions of the GCOC, save for the provision on insurance; and
- completion by 15 February 2023 of the information request sent out on 13 December 2022 (Information Request 7 of 2022 (FAIS)).
In FSCA Communication 16 of 2023, published on 12 May 2023, the FSCA confirmed that the exemption from section 7(1) of the FAIS Act will apply until a licence application submitted between 1 June and 30 November 2023 has been approved or rejected.
The Authority reiterated this point in its communication of 9 November: “For all persons who submit their licence applications within the applicable time period, the exemption will continue to apply until the licence application process has been completed and the licence has been finally approved or declined by the FSCA.”
For queries relating to the declaration or the general exemption, contact the FSCA’s Regulatory Frameworks Department by emailing johann.vanderlith@fsca.co.za and karien.nel@fsca.co.za.
Moonstone Compliance can help
Are you unsure whether you are required to be licensed as a crypto asset FSP? Do you need help with submitting your licensing application? Moonstone Compliance has 20 years’ experience in enabling FSPs of all sizes to meet their FAIS Act obligations.
Click here to read more about Moonstone Compliance’s suite services or send us an online enquiry.
