On Wednesday, South Africa declared crypto assets to be a financial product to make it easier for regulators to monitor the market and help to safeguard consumers.
According to a new notice published on Wednesday, the Financial Sector Conduct Authority defined crypto assets as “a digital representation of value”.
The notice defines a crypto asset as a “digital representation of value” that is not issued by a central bank but can be traded, transferred or stored electronically “for the purpose of payment, investment and other forms of utility.”
The declaration, which takes effect immediately, comes in the wake of governments worldwide moving to regulate cryptocurrencies more strictly and protect users from turbulent digital coins and fraudsters. The declaration would bring digital assets under the purview of South Africa’s regulators.
Marius Reitz, general manager for Africa at Luno, told BusinessTech, “The licensing requirements that will flow from this classification will drive high standards in the industry, particularly in relation to consumer protection, with potential investors easily able to identify those providers that satisfy regulatory requirements.”
“Another key benefit is that it should allow financial advisers to advise their clients on crypto investments formally,” he added.
South Africa ranks 30th worldwide for cryptocurrency adoption, according to the Chainalysis 2022 Global Crypto Adoption Index, published in September. It is estimated that about 10-13% of the South African population are crypto holders.