South Africa approves 59 VASP licenses

South Africa has approved licenses for 59 digital asset companies, an official at the country’s financial regulator has confirmed.

The Financial Sector Conduct Authority (FSCA) declared digital assets to be financial products in 2022, and last year, it demanded that VASPs obtain a permit before the end of November or shut down their operations.

In December, the watchdog revealed that it had received 128 applications and that, at the time, it was weighing issuing the license to 36 applicants. This number rose in January when an official disclosed that the watchdog had shortlisted 50 applicants for the license.

This number has gone up once again. Speaking at a recent financial industry event, Felicity Mabaso, a divisional executive at the FSCA, confirmed that the regulator had approved 59 applications.

Mabaso said the FSCA had received over 355 applications, three times higher than the 93 the watchdog pointed to in December.

Mabaso added that the agency is committed to continued oversight of all virtual asset service provider (VASP) licensees. Additionally, the Authority will conduct investigations and consequently crack down on VASPs that have continued operating without obtaining a license.

In a separate interview with Bloomberg, FSCA Commissioner Unathi Kamlana said, “We are processing those licensing applications, and we’re doing so in a phased kind of manner given the numbers.”

Kamlana acknowledged that the regulator’s approach may not address every vulnerability. However, it’s geared toward tackling the major issues.

“If you wait for the Rolls-Royce kind of regulatory framework, you still have those risks anyway. As we license and supervise, we will discover that perhaps there are gaps that cannot be closed by the existing regulatory framework, the FAIS Act,” Kamlana said.

The FSCA assessed the VASPs’ data storage and protection measures, KYC procedures, systems to handle conflicts of interest, credit counterparty risk management, and customer care. The agency exercised extra vigilance when assessing VASPs that offer additional services like payment rails and custodial services.

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