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South Africa Sets Crypto Rules

FILE: Representations of Bitcoin and other cryptocurrencies on a screen showing binary codes are seen through a magnifying glass. Taken Sept. 27, 2021.

Cryptocurrency financial companies in South Africa will need to apply for a licence between June 1 and Nov. 20, 2023, in order to operate legally, the country's financial conduct regulator said on Thursday.

Eugene Du Toit, head of the Financial Sector Conduct Authority's Regulatory Frameworks Department, said Wednesday's declaration that crypto assets are financial products does not mean that they are legal tender.

"We are not legitimizing crypto assets," Du Toit said. "We are not giving credence to crypto assets."

The FCSA deliberately referred to "crypto assets" rather than cryptocurrencies, as regulators do not believe the digital assets qualify as currencies, the regulator's head Unathi Kamlana said.

Declaring that crypto assets are financial products will enable authorities to clamp down on scams and protect customers, whereas they previously had no power to do so, he said.

Regulators said the declaration and regulations to follow could help South Africa avoid being greylisted by global watchdog the Financial Action Task Force - having deficiencies in its regime against terrorism financing and money laundering - the regulators said.

South Africa's central bank governor said in August that the country was at risk of that action, which IMF researchers said last year reduces capital flowing into a country by an average of 7.6% of GDP.