South Africa's crypto space is expected to transform for the better since there will be a lesser number of unbacked crypto assets in the upcoming year through licensing crypto companies.
What Happened: The Financial Sector Conduct Authority (FSCA) in South Africa announced it has reviewed 128 applications from crypto service asset providers (CASPs).
It plans to discuss only 36 license presentations during its next meeting on Dec. 12, 2023, at its Licensing Executive Committee meeting.
Another 22 applications will be presented on Feb. 13, 2024, while the last 14 applications will have to wait until March 12, 2024. By Oct. 31, FSCA received 93 applications.
The evaluation method is the combined assessment of Know Your Customer onboarding, data protection, cyber risk management, conflict of interest management, complaints handling, and credit counterparty risk management.
In July 2023, FSCA warned that if any CASPs operate without a license after the deadline (2023 year-end) the regulator will take enforcement actions through fines or even closure.
Why It Matters: In its Crypto Assets Markets Study, FSCA found that 60% of all traded crypto in South Africa are unbacked crypto assets, or any cryptocurrency besides stablecoins (26% of the market share) and nonfungible tokens (NFTs, 4% of the market share), and some types of centrally issued coins.
The average crypto asset provider in South Africa (46%) has an annual revenue of between $53,000 to $2.7 million while only 8% of all the CASPs see more than $5.4 million in annual revenue.
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