In April, the Crypto Assets Regulatory Working Group (CAR WG), which resorts under the Intergovernmental Fintech Working Group (IFWG) and whose members include the National Treasury, South African Reserve Bank and Prudential Authority, FSCA, Financial Intelligence Centre, National Credit Regulator and South African Revenue Services, published a position paper that made various recommendations in respect of the regulation of cryptoassets.
The draft Declaration is meant to give effect to some of the recommendations in the position paper by declaring that cryptoassets are financial products under the FAIS Act.
"The Declaration would have the effect that any person furnishing advice or rendering intermediary services in relation to crypto assets must be authorised under the FAIS Act as a financial services provider, and must comply with the requirements of the FAIS Act. This will include crypto asset exchanges and platforms, as well as brokers and advisors," the FSCA said.
The FSCA said that the draft Declaration should improve disclosures to customers that show the risks involved in investing in cryptoassets better and it should also ensure that a more robust advice process is adopted when intermediaries advise customers to buy cryptoassets.
In addition, the licensing of intermediaries is also needed to improve the quality of data for policymakers and regulators about the crypto space and to determine whether further regulation is required.
"The draft Declaration in no way impacts the status of crypto assets in the context of other laws such as exchange control regulations, requirements under the Pension Funds Act and Collective Investment Schemes Act and so forth, nor does it attempt to regulate, legitimise or give credence to crypto assets. The draft Declaration is merely intended to be an interim step in mitigating certain immediate risks in the crypto assets environment pending the outcome of broader developments currently taking place through the CAR WG which will inform future policy interventions to be implemented across a variety of regulators and laws," the FSCA said.