Exploring the development of regulatory framework for crypto assets in South Africa

This paper explores the need for, and forms of regulatory framework and laws established to guide and control the growing number of individuals and firms investing and trading in crypto assets in South Africa. The step taken to regulate crypto assets was necessitated by the 2021 report of the Paris-based intergovernmental organisation referred to as the Financial Action Task Force (FATF) which revealed that there is apparent lack of crypto assets regulation in South Africa. In rising to this challenge, the South African regulatory authority known as the Financial Sector Conduct Authority (FSCA) in October 2022 indicated that crypto assets are digital representation of value and therefore could be categorised as financial product which are to be subjected to FSCA regulations with reference to Section 1(h) of the Financial Advisory and Intermediary Services Act (FAIS). The method adopted was to review the regulatory framework and laws governing crypto assets in South Africa. It was found that relevant regulatory framework and laws are needed to provide adequate protection for the investing public and to provide avenues for the sustainability and stability of the crypto assets business sector. The paper concludes that providing an efficient regulatory framework for crypto assets in South Africa will assist in limiting the risk of volatility and cyber-attacks to which individuals and firms trading and/or investing in crypto assets are exposed to. Moreover, an awareness of various regulatory controls and laws governing investments in crypto assets will ensure that individuals and firms in this sector tread in the path of caution.