Message from South Africa to the Continent: Unity and Progress for Africa
South Africa's regulatory approach towards cryptocurrencies has taken a more stringent turn, with increased oversight and compliance requirements being implemented. This shift was discussed by the Financial Sector Conduct Authority's (FSCA) commissioner, Unathi Kamlana, during a public lecture at North-West University.
One of the key changes is the classification of crypto-assets as financial products, subject to licensing, anti-money laundering (AML), and know-your-customer (KYC) obligations. This move has influenced the growth of crypto businesses by imposing stricter registration and risk management rules, aimed at ensuring consumer protection and creating compliance barriers for new entrants.
Since April 2025, South Africa has implemented the crypto Travel Rule for crypto asset service providers (CASPs), requiring them to register with the Financial Intelligence Centre (FIC) and comply with AML/KYC standards. The FSCA supervises these platforms to protect consumers and maintain financial integrity, aligning South African crypto businesses with global standards set by the Financial Action Task Force (FATF).
This regulatory clarity fosters a more legitimate and transparent crypto ecosystem, but it also leads to some applications getting rejected due to non-compliance. As of June 30, 2024, the total number of licensed CASPs in South Africa was 138, with the FSCA having received a total of 383 CASP license applications since the process began on June 1, 2023. The FSCA has launched 30 investigations into unauthorized crypto-related financial services.
Kotani Pay, a crypto payment solutions provider known for its operations in Africa, would need to align with these licensing and AML/KYC requirements to operate legally and gain trust from regulators and consumers in South Africa. The strengthened regulatory framework likely encourages more responsible growth for Kotani Pay by requiring compliance but could slow rapid expansion due to increased bureaucratic hurdles.
It's worth noting that Kotani Pay, originally founded in Kenya, is now licensed in South Africa. However, the specific impact of these regulations on Kotani Pay's local operations and growth prospects was not directly mentioned in the available information.
In a separate development, a Central Bank of Nigeria (CBN) official has testified in the ongoing legal case against Binance, potentially complicating the case due to Nigerian users of Binance conducting transactions using pseudonyms.
Finally, the FSCA is moving towards a principles-based regulatory approach, focusing on ensuring fair treatment of customers rather than prescribing detailed rules. In the second quarter of 2024, the FSCA granted 63 new licenses to CASPs, with five applications being declined and 80 applicants voluntarily withdrawing following discussions with the regulator.
These developments underscore the evolving regulatory landscape for cryptocurrencies in South Africa and the broader African continent, with implications for businesses like Kotani Pay and Binance as they navigate these changing compliance demands.
[1] South African Reserve Bank. (2023). Crypto Assets Position Paper. Retrieved from https://www.resbank.co.za/-/media/documents/publications/policy-and-research/crypto-assets-position-paper.pdf
[2] Financial Sector Conduct Authority. (2023). Crypto Asset Service Providers (CASPs) Regulatory Framework. Retrieved from https://www.fsca.co.za/regulation/regulated-industries/crypto-assets/crypto-asset-service-providers-casps/crypto-asset-service-providers-casps-regulatory-framework/
- South Africa's more stringent approach towards cryptocurrencies classifies crypto-assets as financial products requiring licensing, AML, and KYC obligations, a move that impacts the growth of crypto businesses.
- Kotani Pay, a crypto payment solutions provider, needs to align with these licensing and AML/KYC requirements to operate legally and gain trust in South Africa.
- The Central Bank of Nigeria's involvement in a legal case against Binance could potentially complicate matters due to Nigerian users transacting using pseudonyms.
- The FSCA in South Africa is moving towards a principles-based regulatory approach, emphasizing fair customer treatment rather than prescribed rules.
- In alignment with global standards set by the Financial Action Task Force (FATF), South African crypto businesses are supervised to protect consumers and maintain financial integrity.
- The FSCA's focus on consumer protection and compliance has led to an increase in the number of licensed Crypto Asset Service Providers (CASPs) in South Africa, while also resulting in some applications being rejected for non-compliance.
