Declaration of Crypto Assets as a Financial Product under the FAIS Act

By a declaration published on 19 October 2022, the Financial Sector Conduct Authority (FSCA) brought crypto assets within the definition of a 'financial product' under the Financial Advisory and Intermediary Services Act 2002 (FAIS Act), making South Africa one of the first African jurisdictions to subject crypto-asset businesses to financial-services licensing. The declaration reverses the earlier position that crypto was largely unregulated and responds to consumer-protection risks, fraud, and South Africa's commitments under Financial Action Task Force (FATF) standards. A crypto asset is defined as a digital representation of value that is not issued by a central bank but can be traded, transferred or stored electronically for payment, investment or other utility. The legal effect is that any person furnishing advice or rendering intermediary services in relation to crypto assets must be licensed as a financial services provider (FSP) under the FAIS Act and must comply with the conduct, fit-and-proper, disclosure and record-keeping obligations applicable to FSPs. Crypto asset service providers were given a transitional window (applications between 1 June and 30 November 2023) within which to apply for licensing while continuing to operate. The declaration carves out certain activities, for example crypto-asset mining, node operation and services relating to non-fungible tokens, from the licensing requirement. Supervision and enforcement sit with the FSCA, which can refuse, suspend or withdraw licences and take conduct-related action; crypto-asset providers are also brought within the anti-money-laundering regime as accountable institutions. As the instrument that placed crypto-asset intermediation under a financial regulator's conduct perimeter, the declaration is central to South Africa's fintech and digital-asset regulation.

1. 1Declares crypto assets a 'financial product' under the FAIS Act
2. 2Persons advising on or providing intermediary services for crypto assets must be licensed as FSPs
3. 3FSP conduct, fit-and-proper, disclosure and record-keeping obligations apply
4. 4Transitional licensing window for existing providers (1 June - 30 November 2023)
5. 5Carve-outs for crypto mining, node operation and NFT-related services
6. 6FSCA supervision and enforcement; crypto providers brought within the AML regime