A Notice declaring a crypto asset as a financial product under the Financial Advisory and Intermediary Services Act 37 of 2002 (“the Act”) was published in the Government Gazette on 19 October 2022.
In terms of this Notice “crypto asset” means a digital representation of a value that –
is not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility;
applies cryptographic techniques; and
uses distributed ledger technology.
The Authority, under paragraph (h) of the definition of “financial product” as defined in section 1 of the Act, hereby declares a crypto asset as a financial product for purpose of that definition.
This Declaration is effective as of 19 October 2022.
Please note that the Declaration does NOT apply to financial services rendered in relation to crypto asset derivatives as such FSPs are already subject to the requirements of the the Act and are not subject to the general exemption referred to below.
The FSCA also published this Policy Document supporting the Declaration. To support a smooth transition into the FAIS framework, providers of financial services related to crypto assets are required to apply for the relevant license between 1 June 2023 and 30 November 2023.
The FSCA also published this general exemption of persons rendering financial services (advice and/or intermediary services) in relation to crypto assets, from section 7(1) of the FAIS Act.
The purpose of this exemption is to –
further facilitate transitional arrangements for existing providers of crypto asset activities. The transitional arrangements entail that a person may continue to render financial services in relation to crypto assets without being licensed, provided that such person applies for a license under the FAIS Act within the period specified above. The exemption will apply until the license application submitted has been approved or declined; and
exempt certain ecosystem participants from the FAIS Act. These participants are crypto asset miners and node operators performing functions in respect of the security and health of the network, as well as persons only rendering financial services in relation to non-fungible tokens.
Lastly, the FSCA published this Draft Exemption of Persons rendering Financial Services in relation to Crypto Assets from Certain Requirements for public comment.
The draft exemption proposes to exempt licensed Crypto Asset FSPs, their key individuals and representatives from certain requirements of, amongst others, the General Code of Conduct for Authorised Financial Services Providers and their Representatives and the Determination of Fit and Proper Requirements, 2017.
Submissions on the draft Exemption must be made using this submission template and be submitted in writing on or before 1 December 2022 to the FSCA at FSCA.RFDStandards@fsca.co.za.