Leading cryptocurrency exchange and OTC desk OVEX has had a very busy 2022. The market maker received significant licensing approvals over the course of the year as it continued to expand its operations across the African continent.
Chief compliance officer Tatenda Nhemachena emphasised the importance of working closely with local regulators and obtaining the relevant licences.
“Preventing bad actors from damaging the potential of this new technology requires fostering a regulatory framework that is intended to protect investors and preserve financial stability while still allowing for innovation as well as fostering the attractiveness of the crypto asset sector. This is why we work closely with local regulators to achieve our overarching mission of ‘future-proofing’ African finance.
“The interlinkages between cryptocurrency and legacy finance are becoming ever more prevalent. This is why crypto licensing and authorisation criteria should be clearly articulated, the responsible authorities clearly designated and the extent of their overreach clearly defined.”
The widespread adoption of cryptocurrency on the African continent comes as no surprise. The technology has the ability to bridge the gaping economic welfare gap – helping Africans fulfil their personal and entrepreneurial needs. These include remittances, e-commerce, payments, wealth preservation and the social good.
The remittance corridor between Africa and Western markets is well known for being one of the most expensive in the world. This is incentivising increasing numbers of African consumers to use digital assets to send or receive money from friends or family abroad. Legacy corridors face high fees, slow settlement times and a general lack of innovation in cross-border payments infrastructure. These pitfalls have negatively impacted growth in the developing world.
Then there is the ability of crypto to bring financial services to anyone regardless of their socioeconomic status, where they live or their financial situation – crucial for Africa’s largely unbanked population (an estimated 55% of the population).
Proactive stance
Some governments in Africa are taking a more proactive stance towards regulation than others. South Africa (previously at risk of being “grey-listed” for having deficiencies in its regime against terrorism financing and money laundering) has now taken the necessary first steps towards regulating crypto assets.
The South African Reserve Bank initially settled on merely observing the developments in this market. But now it is evident that cryptocurrency is being widely adopted and used in South Africa, hence the Bank’s decision to bring crypto under its regulatory ambit.
The Financial Sector Conduct Authority declared crypto assets to be financial products in a recent notice and said it would require companies that trade in cryptocurrencies and other digital assets to obtain a licence from 1 June 2023. The first step in this process involved declaring cryptocurrency as a financial product in South Africa.
OVEX is an institutional exchange. This means adhering to the highest standard of compliance is crucial for the market maker. What is more, in order to provide an A-Z service to these high-volume players, OVEX has achieved accreditation in fields outside the realm of cryptocurrency.
Some of the licences OVEX obtained over the course of the year include:
- DMCC: A licence for proprietary trading in crypto commodities from the Dubai Multi Commodities Centre, Dubai.
- SA NCR: OVEX is a registered credit provider with the National Credit Regulator in South Africa.
- Vara: Permission by Virtual Assets Regulatory Authority, Dubai, to operate a virtual currency exchange.
- Austrac: Registration as digital currency exchange, Australia.
- Reserve Bank Treasury Outsourcing: Permissioned treasury outsourcing company/forex broker by the South African Reserve Bank.
- FSP: OVEX fsp (pty) ltd, category one financial services provider licence with the FSCA, covering forex intermediation in South Africa.
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