Cryptocurrency Inquiries: South Africa Reveals Plans for 30 Probes on Digital Asset Transactions
The Financial Sector Conduct Authority (FSCA) of South Africa has taken significant strides in regulating the crypto industry, with a primary focus on consumer protection, financial integrity, and cross-border transactions.
In a move to address unauthorized crypto-related financial services, the FSCA's enforcement division has established an investigation team. As of mid-2025, this team has launched 30 investigations into entities offering crypto financial services without proper licensing.
The FSCA declared crypto assets as financial products back in October 2022, marking a pivotal moment in the country's regulatory approach to digital assets. The first set of licenses were issued in the first quarter of 2024, and as of June 30, 2024, a total of 138 crypto asset service providers have been licensed. Notable recipients include Luno and Valr.
The FSCA's latest regulatory actions report detailed these developments, emphasizing the authority's commitment to overseeing the crypto industry. The authority has also granted a grace period for submitting license applications, which ends on November 30, 2023.
One of the key focus areas of the latest regulatory actions is the preparation of a new regulatory framework targeting crypto services involved in cross-border transactions. This framework, expected in 2025, will be developed in coordination with the South African Reserve Bank (SARB), the National Treasury, and the FSCA.
The new framework aims to align South African exchange control laws with the realities of the digital asset market, focusing on curbing risks related to money laundering and terrorist financing. It will set out conditions, administrative duties, and reporting requirements to prevent illicit flows and close regulatory gaps highlighted by a recent High Court ruling exempting cryptocurrencies from existing exchange control laws.
The FSCA supervises crypto platforms to ensure consumer protection and financial integrity. The authority has warned the public against fraudulent crypto schemes promising unrealistic returns. Regulatory compliance also includes mandatory registration of crypto exchanges and wallet providers with the Financial Intelligence Centre (FIC) and adherence to Anti-Money Laundering (AML) and Know Your Customer (KYC) standards.
South Africa classifies crypto-assets as financial products, making exchanges and advisors subject to licensing and AML obligations under FATF standards. The country also plans to implement the global crypto Travel Rule from April 2025.
In summary, South Africa's crypto regulatory environment is focused on licensing CASPs (138 licenses issued by mid-2024), enforcing AML/KYC compliance, protecting consumers, and introducing a new SARB-led framework to regulate cross-border crypto asset flows with an emphasis on transparency and risk mitigation. This reflects a cautious but structured approach to integrating digital assets within existing financial regulatory frameworks.
- The Financial Sector Conduct Authority (FSCA) is not only focused on regulating crypto-related financial services, but also on ensuring these services are provided by licensed crypto asset service providers (CASPs), such as Luno and Valr, to maintain financial integrity.
- As part of their efforts to combat money laundering and terrorist financing, the FSCA, along with the South African Reserve Bank (SARB) and the National Treasury, is developing a new regulatory framework for crypto services involved in cross-border transactions, with a focus on aligning exchange control laws with the digital asset market.
- Businesses in the African crypto industry must adhere to stringent regulations, including Anti-Money Laundering (AML) and Know Your Customer (KYC) standards, as crypto-assets are classified as financial products, making them subject to licensing, AML obligations under FATF standards, and mandatory registration with the Financial Intelligence Centre (FIC).
