Legal updates and opinions
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
What are you worth? “if you’re not paying for a product, then you are a product.”
In the digital world, this happens to be true. But it is not only companies that have realised the value [...]
The privacy of customers seemingly protected by RICA
The Regulation of Interception of Communications and Provision of Communication Related Information Act 70 of 2002 ("RICA") was enacted more [...]
The publication of information by the Auditor General in terms of PAIA
and Chiara Ferri, Candidate Attorney In the High Court judgment of Sakeliga NPC v The Auditor-General South Africa (36297/2022) [2023] [...]
Heritage Matters: Celebrating Heritage Month 2023
In this Heritage Month, as we celebrate the richness of Traditional Knowledge (TK) and Traditional Cultural Expressions (TCEs), we [...]
“All change is good”: potential implications of the proposed changes to taxation of income subject to withholding taxes awarded by South African trusts to foreign beneficiaries
and Benedict Ngobeni - Candidate Attorney Reviewed by Ernest Mazansky - Director, Werksmans Tax (Proprietary) Limited Currently, income arising in [...]
The changing landscape of the Companies Act, 2008: the Second Amendment Bill, 2023
In the wake of the Zondo Commission of Enquiry into State Capture's recommendation that certain provisions in the Companies [...]
