Crypto assets to be declared a financial product
Financial Advisory and Intermediary Services Act
During June 2020 we published an article about the Intergovernmental Fintech Working Group (IFWG) proposals regarding the Regulation of crypto assets. The intergovernmental Fintech Working Group (IFWG) was established during 2016 and consists of representatives from the National Treasury, the SARB, the SARS, the Financial Sector Conduct Authority, the NCR and the Financial Intelligence Centre. The IFWG formed a Crypto Assets Regulatory Working Group (CAR WG) with the aim of formulating a policy on the stance on crypto assets.
A position paper on Crypto Assets was published and the IFWG recommended that entities providing crypto-asset services be classified as Crypto Asset Service Providers (CASPs) and will be required to register as an Accountable Institution with the FIC and will subsequently be required to adhere to the legislative obligations aimed at anti-money laundering/combating the financing of terrorism (AML/CFT). It was further recommended that services rendered in respect to crypto assets will be included in the definition of "financial services" in the Financial Sector Regulation Act and that "services related to the buying and selling of crypto assets" will be included under the licencing activities under the Conduct of Financial Institutions (COFI) Bill.
The FSCA is of the opinion that crypto assets are similar in nature to certain financial products as defined in the FAIS Act and as an interim measure to address the risk that crypto-assets may have to consumers it proposes that crypto-assets be declared as a financial product for the purposes of the FAIS Act.
If crypto assets is declared a financial product under the FAIS Act any person rendering financial services in relation to crypto-assets must be authorised as a financial services provider under the FAIS Act and must comply with the requirements in terms of the FAIS Act and General Code of Conduct for Authorised Financial Services Providers and Representatives, 2003 (General Code) and the fit and proper requirements.
The FSCA invites public participation to submit comments on the draft declaration in writing on or before 28 of January 2021. For more information please see Draft declaration of crypto assets as a financial product