Legal updates and opinions
Authors
News / News
The FSCA declares crypto assets as financial products
by Kyra South, Senior associate, and Janice Geel, Candidate Attorney
Reviewed by Natalie Scott, Director in Banking and Finance and Head of Sustainability
Declared Crypto Assets as Financial Products
On 19 October 2022, the Financial Sector Conduct Authority (FSCA) published General Notice 1350 of 2022 in Government Gazette 47334 (Notice), wherein “crypto assets” were declared ‘financial products’ under section 1 of the Financial Advisory and Intermediary Services Act No. 37 of 2002 (FAIS Act).
In terms of the Notice and for purposes of the FAIS Act, a “crypto asset” is 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 payment, investment, and other forms of utility;
- applies cryptographic techniques; and
- uses distributed ledger technology.
Crypto Assets Regulatory Working Group
The Notice comes after the Crypto Assets Regulatory Working Group of the Intergovernmental Fintech Working Group, in its position paper on crypto assets dated 11 June 2021, recognised that crypto assets must be incorporated within the South African regulatory framework.
The FSCA, in its policy document issued on 19 October 2022 supporting the Notice (Policy Document), sets out the effect, scope, licensing, and transitional provisions of the Notice. In terms of the Policy Document, crypto service providers in South Africa must apply for a licence between 1 June 2023 and 20 November 2023 to legally operate within South Africa or risk criminal conviction and a R10 million fine.
As a result, any person rendering crypto services and/ or selling crypto assets must be licensed as a financial service provider in terms of the FAIS Act.
The FSCA, in its press conference on 20 October 2022 stated that that the regulation and licensing of crypto assets is intended to protect consumers from crypto scams and empower the authorities to take action against such crypto scammers.
Even though the FSCA supports the Notice, it deliberately referred to crypto assets as opposed to cryptocurrencies, as the FSCA does not believe that cryptocurrency meets the criteria for currency.
Can crypto assets be exported?
The FSCA reiterated that currency (or legal tender) must
(i) store value,
(ii) have a unit of account,
(iii) have general acceptance and
(iv) be a medium of exchange.
Latest News
Strike action in circumstances where there has been a long delay between the issuing of a certificate of outcome and the subsequent election to embark on a strike
PRASA t/a Metrorail v SATAWU and Others (C190/2016) ISSUE Whether a strike is protected in circumstances where there has [...]
Is length of service reason to pay different salaries to employees performing the same functions?
Pioneer Foods (Pty) Ltd v Workers Against Regression (WAR) & others ISSUE Whether length of service is a [...]
Is a trade union entitled to organisational rights in terms of the LRA after acquiring majority representation at a single branch?
Professional Transport and Allied Workers Union obo members / Professional Aviation Services [2016] 4 BALR 421 ISSUE Whether a [...]
Asset for share transactions – beware of selling your shares within 18 months especially in the context of a share buy-back
To prevent tax considerations from discouraging the incorporation of a business, a specific form of ‘rollover relief’ is available when an asset [...]
A new era dawns – criminalisation of cartel conduct
On 22 April 2016, a Presidential Proclamation (“Proclamation”) appeared in the Government Gazette which confirmed that the provisions contained in [...]
The employer’s responsibility during the transfer of an employee
Senne and others v Fleet Africa [2016] ZALCJHB 48 ISSUE One of the automatic consequences of a transfer in [...]
