Africa's Statement to the Remainder of the Continent by South Africa
In the realm of cryptocurrency regulation, two African nations, South Africa and Nigeria, have taken distinct paths.
South Africa is actively developing a comprehensive regulatory framework for cross-border cryptocurrency transactions. This new approach, as outlined by Financial Sector Conduct Authority (FSCA) commissioner Unathi Kamlana in a public lecture on June 26, 2024, aims to regulate crypto asset service providers (CASPs) with clear parameters, administrative duties, and reporting requirements. The goal is to curb illicit flows and align laws with the digital asset reality.
This shift comes following a High Court ruling exempting cryptocurrencies from exchange control regulations, which prompted authorities to replace broad exemptions with targeted regulation on CASPs. South Africa classifies crypto assets as financial products, subjecting exchanges and advisors to licensing and anti-money laundering (AML) rules.
In contrast, Nigeria's cryptocurrency regulation is less detailed in the provided recent results, but historically, the Central Bank of Nigeria (CBN) has implemented stricter measures. These have included bans and prohibitions on financial institutions facilitating crypto transactions, reflecting a more cautious and sometimes restrictive stance compared to South Africa's evolving and systematized regulatory approach.
The FSCA's regulation places significant oversight responsibilities on "key individuals," which include top executives. As of June 30, 2024, the FSCA has received a total of 383 CASP license applications since the process began on June 1, 2023. The authority has approved 63 new licenses in the second quarter of 2024, bringing the total number of licensed CASPs to 138. However, the remaining applications are still under consideration.
Notably, the FSCA has declined five applications and 80 applicants have voluntarily withdrawn following discussions with the regulator. This is a testament to the authority's commitment to maintaining a robust regulatory environment.
Meanwhile, in Nigeria, Olubukola Akinwumi, deputy director at the CBN, testified before the Federal High Court in Abuja on July 5, 2024, stating that Nigerian users of Binance conduct transactions using pseudonyms. This testimony is part of the ongoing trial against Binance and its executive, Tigran Gambaryan, facing money laundering charges involving $35.4 million.
Akinwumi also stated that Binance's services related to naira deposits and withdrawals are regulated activities typically carried out by CBN-registered institutions. However, Binance does not have a license to operate in Nigeria, as emphasized by Akinwumi.
In summary, South Africa's approach is more regulatory-framework focused and adaptive, while Nigeria has been more prohibitive, though it may be evolving as well. The different approaches reflect each country's unique regulatory landscape and their respective strategies to balance innovation with effective regulatory oversight.
[1] https://www.iol.co.za/business-report/technology/south-africa-to-regulate-cryptocurrencies-as-financial-products-fsca-98025432 [2] https://www.fin24.com/Tech/Crypto/South-Africas-FSCA-to-regulate-cryptocurrencies-as-financial-products-20220512 [3] https://www.iol.co.za/business-report/technology/crypto-assets-will-be-regulated-as-financial-products-fsca-97804810 [4] https://www.iol.co.za/business-report/technology/sa-to-regulate-crypto-assets-as-financial-products-fsca-97964826 [5] https://www.fin24.com/Tech/Crypto/sa-to-regulate-crypto-assets-as-financial-products-20220512
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