South Africa Defines Crypto as Financial Product
The definition could widen the adoption of crypto across a nation whose population exceeds four million
Pretoria, South Africa; Source: Shutterstock
- The country’s financial regulator has issued a general notice defining crypto within a legal framework
- Crypto, as defined by the regulator, must possesses cryptographic properties and not belong to a central bank
South Africa’s primary markets regulator formally established legal definitions for cryptoassets on Wednesday, joining other nations on the continent in their efforts to increase industry oversight.
The Financial Sector Conduct Authority (FSCA) issued its general notice, defining crypto as financial instruments under the country’s financial services act, which brings the asset class in line with other regulated financial products.
Its definition widens the possibility for greater adoption of crypto in South Africa, which had already allowed citizens to freely hold and trade them.
Specifically, the FSCA’s declaration defines crypto as a distributed ledger technology-based asset not issued by a central bank and employing cryptographic techniques.
The asset must also be tradable and capable of being stored electronically for the purpose of payment and investment or other forms of utility, the regulator said.
Under the Financial Advisory and Services Act 2002, a financial product is defined as any money-market instrument, company shares, securitized debt and securities, among other things.
Several nations across the continent have in place provisions for dealing with crypto, including The Central African Republic which adopted bitcoin as legal tender in February, becoming the second country in the world to do so.
Also in February, Botswana passed a bill to regulate the trading of digital assets in a bid to tighten anti-money laundering measures.
The stance towards crypto across various African countries remains divided, however. Nigeria, for instance, has a bank ban in place for trading digital assets despite the country launching its own central bank digital currency, the eNaira in October 2021.
Several nations, including Cameroon, Egypt, Morocco and Tunisia also have bans in place against investing and using crypto, fearing the asset could pose a significant risk to their economic sovereignty.
Many other countries of the 54-member continent are yet to implement formal crypto regulations, with many of their central banks cautioning against their use.
Don’t miss the next big story – join our free daily newsletter.