The financial sector regulator in South Africa is the Financial Sector Conduct Authority (FSCA) and its head of enforcement, Brandon Tophamhas disclosed that they have issued warnings to some global crypto exchanges. He added that they were targeting global crypto exchanges within South Africa because they have not been registered for offering a derivative product that has crypto as the reference or underlying asset. It had been reported previously that the South African regulator had issued similar warnings to global crypto exchange platforms publicly, including those like Bybit, Binance and FTX.
There have been cases where some crypto exchanges operating in the country have had to terminate certain services because of the warnings that have been issued. According to the FSCA, the purpose of their warnings is to safeguard public interests, but there has been speculation that the regulator is targeting global crypto exchanges because they are primarily focused on crypto. However, the FSCA official pushed back against this narrative and said that they had only taken action against the crypto exchanges because they have not been registered for offering derivatives in the country. He elaborated that they were talking to several over the counter derivative product (ODP) providers because they are not registered.
The official went on to say that the regulatory authority is working on developing a crypto regime that can offer crypto investors with protection. The FSCA official said that they want to create a regulatory environment where the providers can be registered, as this would protect legitimate players and customers from exploitation. According to the official, once the regulatory environment has been established, it would help make South Africa one of the most progressive countries globally. However, Tophamstated that it was not the intention of the regulator to put a stop to the development of the crypto industry in South Africa.
Instead, he elaborated that the financial regulatory authority only wants to help ensure the development of the crypto industry in South Africa. But, he said that they did not want to rush into it. This is not the first regulatory authority to have taken steps against crypto exchanges in their region. Other countries have been forced to take action against crypto-related platforms because the industry is still heavily unregulated and there are a lot of risks involved. As a matter of fact, countries like China have gone as far as imposing a complete ban on all crypto activities, be it mining or trading.
Meanwhile, there are other countries that are working on developing a regulatory environment much like South Africa. Some are still debating about the rules to be established. In fact, this interest in digital currencies has even pushed central banks in various countries to look into the prospect of developing their own central bank digital currencies (CBDC), which can offer better security than cryptocurrencies as they will be backed by assets and will have the support of the central bank. It remains unclear if South Africa will join the CBDC bandwagon or not.