South Africa’s financial watchdog issued almost 250 licenses to VASPs in 2024 and is still considering over 50 more amid a surge in digital asset trading on local platforms.
The Financial Sector Conduct Authority (FSCA) revealed in a update that since it introduced a new licensing system in June 2023 it had received 420 license applications. It approved 248 applicants and rejected nine. A further 106 applicants voluntarily withdrew their applications after consultation with the watchdog. Voluntary withdrawal allows the applicant to reapply later after correcting the deficiencies.
But according to the regulator, 106 companies had given up digital assets after consultation showed that their business models did not suit the industry.
FSCA is still processing 56 applications.
Among the VASPs that received a license this year are Luno and VALRtwo of the largest stock exchanges in the country. Three months later, the watchdog is issued a new group of 63 applicants, with others, such as EA Capital, receiving the license towards the end of the year.
In its latest update, the FSCA revealed that the rejected applications breached two main criteria: operability and competence. As regards the latter, the applicants have not been able to prove that they had the necessary knowledge and practical experience to run the VASP business.
The regulator warned VASPs operating without a license of serious legal consequences. It also reminded investors that its authority over VASPs only extends to companies offering “crypto-related” financial services; “This authorization does not include the recognition of crypto assets as a legal form of tender or ‘cryptocurrency,'” it said.
South Africa is one of Africa’s largest digital asset markets, and in 2024 it was recognized by ConsenSys as a global leader in digital asset ownership. Last year, local VASPs said the bull market rekindled this interest, with most platforms recording some of their highest numbers in years.
Luno was among the VASPs that saw an increase in trading activity, revealed Christo de Wit, the exchange’s country manager for South Africa. However, de Wit believes that regulatory clarity has also played an important role.
“Regulation worldwide has increased the legitimacy of crypto. In SA, crypto asset providers such as Luno were officially recognized as financial service providers by 2024,” he said.
VALR CEO Farzam Ehsani also revealed that the exchange hit one million users for the first time at the end of last year.
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