South Africa will license about 60 cryptocurrency platforms by the end of the month, putting it among the first nations on the continent to require digital asset exchanges to have permits to operate.

The Financial Sector Conduct Authority, which gave exchanges until 30 November to apply for licences or risk facing enforcement action, said more than 300 crypto-asset providers sought approvals.

“We are processing those licensing applications and we’re doing so in a phased kind of manner given the numbers,” FSCA commissioner Unathi Kamlana said.

The regulator opted not to develop a separate framework for crypto operators, and instead will oversee the firms under the existing Financial Advisory and Intermediary Services Act, which focuses on the honesty, integrity, competency and ability of all financial services providers under its so-called fit-and-proper requirements.

“If you wait for the Rolls-Royce kind of regulatory framework, you still have those risks anyway,” Kamlana said, adding that the current law will cover most gaps.

Bitcoin — the world’s largest cryptocurrency — hit an all-time high of US$73 664 on Wednesday, bolstered by record-breaking inflows into US exchange-traded funds tied to the unit. Other cryptocurrencies have been similarly lifted by renewed interest in the asset class. Ether traded as much as 3.3% higher on Wednesday and has increased about 75% this year.

Fais Act

With crypto exchanges falling under the Fais Act, consumers will also have recourse and protections that don’t exist right now, with the regulator being able to take enforcement action if an operator breaches of any of the act’s requirements.

“As we license and supervise, we will discover that perhaps there are gaps that cannot be closed by the existing regulatory framework, the Fais Act,” he said. “And we might need to build on that as we discover what those are.”

Several of the continent’s biggest trading venues emerged from South Africa, including Luno — owned by Barry Silbert’s Digital Currency Group — and Pantera-backed VALR. Other global platforms such as Binance Holdings operate in the country.

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Yellow Card Financial, a pan-African cryptocurrency exchange, was the first company on the continent to secure a licence, when Botswana issued the permit in 2022. — Reported with assistance from Emily Nicolle, (c) 2024 Bloomberg LP