The South African Financial Sector Conduct Authority (FSCA) announced that it has received 128 applications for crypto asset service provider licenses as of November 30, 2023, according to a report by South African news publication My Broadband. This update was given during a presentation on the licensing of cryptocurrency services in South Africa. The FSCA also revealed that it had received 93 applications by October 31, 2023.

Today is the deadline for already-operating providers to submit their license applications. Of the total applications received, 19 were withdrawn due to a lack of experience and appropriate operational policies and procedures. Currently, there are 74 applications under consideration, with different timelines for their assessment and review.

At the upcoming Licensing Executive Committee meetings, the Financial Sector Conduct Authority (FSCA) will present its assessments for a total of 36 completed applications on December 12, 2023. These applications have been thoroughly reviewed and are now ready for consideration. Additionally, 22 applications are pending for various reasons, which will be presented at the February 13, 2024 committee meeting. The FSCA is currently analyzing these applications further to ensure all requirements are met. Furthermore, 14 applications are still undergoing in-depth analysis and will be presented to the committee on March 12, 2024. Finally, two applications remain undisclosed, and further information regarding their status will be shared in due course.

The FSCA considered several factors while analyzing each prospective licensee, including the criticality of market services, whether they provide multiple services, and whether they offer market support services like custodial and payment rails. The regulator also evaluated the applicants' operational policies and procedures, such as know-your-customer onboarding (known as "FICA" in South Africa), data protection, cyber risk management, conflict of interest management, complaints handling, and credit counterparty risk management. In addition, the FSCA conducted due diligence checks with other regulatory authorities, including the Payments Association of South Africa and the Reserve Bank Financial Surveillance department.

This update follows South Africa's decision in June to become the first country continent to require crypto exchanges to obtain licenses. The FSCA mandated that all crypto exchanges in the country must obtain licenses by the end of 2023 to protect investors. Commissioner Unathi Kamlana of the financial regulator warned that enforcement actions, including fines or closure, would be taken against non-compliant exchanges operating without a license.

South Africa has been actively focusing on blockchain technology and its potential benefits. Recently, the country joined a list of 47 other nations committed to adopting a taxation standard on crypto assets by 2027. The South African Revenue Service (SARS) welcomed the standard developed by the Organisation for Economic Cooperation and Development (OECD), which allows the automatic exchange of information related to the ‘crypto-asset’ tax.

The FSCA's efforts to regulate the crypto asset service provider industry in South Africa have received significant interest, as evidenced by the 128 applications received. This influx of applicants highlights the growing importance of cryptocurrencies and blockchain technology in the country's financial landscape. By implementing licensing requirements, the FSCA aims to protect investors and ensure a safer environment for crypto exchanges to operate.

Furthermore, the country's new push for transparent crypto regulations and the adoption of the OECD's taxation standard further demonstrates its commitment to aligning with international norms and fostering a transparent and accountable crypto ecosystem.