Crypto assets are to be treated as financial products in South Africa, to make it easier for regulators to monitor the market and help safeguard consumers.

The Financial Sector Conduct Authority defined crypto assets as “a digital representation of value” in a gazette notice published on Wednesday 19th October 2022. A crypto asset isn’t issued by the central bank but can be traded, transferred, or stored electronically for purposes of payment, investment, or other forms of utility, according to the announcement.

The announcement is the first legal step that was required to bring the crypto-asset industry within the South African legal framework, said Brent Peterson, head of legal at Easy Crypto Ltd., a crypto exchange.

The declaration, which takes effect immediately, comes as governments around the world push to regulate cryptocurrencies to protect users from turbulent digital coins and fraudsters. US regulators and lawmakers are studying ways to guide the operation of stablecoins.

“The licensing requirements that will flow from this classification will drive high standards in the industry, particularly in relation to consumer protection, with potential investors easily able to identify those providers that satisfy regulatory requirements,” Marius Reitz, general manager for Africa at crypto platform Luno, said in an emailed statement. “Another key benefit is that it should allow financial advisers to formally advise their clients on crypto investments.”

FSCA General Notice 19/10/20200

Policy Document supporting the Declaration of Crypto Assets as Financial Products in South Africa