On 19 October 2022, the FSCA published the final Declaration of a Crypto Asset as a Financial Product (Declaration) under the Financial Advisory and Intermediary Services Act, 2003 (FAIS Act) – see detail here.
Together with a policy document setting out the thinking behind the Declaration, and an overview of applicable transitional provisions, the FSCA also published a General Exemption regarding the licensing of Crypto Asset FSPs, and a Draft Exemption which proposed to exempt licensed Crypto Asset FSPs and their key individuals and representatives from certain requirements of the General Code of Conduct for Authorised Financial Services Providers and Representatives, 2003 and the Determination of Fit and Proper Requirements for Financial Services Providers, 2017 (Determination), among others.
FSCA Communication 16 of 2023, provides important updates on both the General Exemption and the Draft Exemption.
- The General Exemption allows a person who, as a regular feature of their business renders a financial service in relation to crypto assets, to continue to render such services, without being licenced under section 7(1) of the Act, provided that the person applies for a licence under the FAIS Act between 1 June 2023 and 30 November 2023, and complies with the other conditions indicated in the exemption. Full detail on the General Exemption can be accessed here.
- Licence Forms FSP 2, FSP 4C, FSP 4D and FSP 5 that need to be completed by FSPs and submitted to the FSCA when applying for a licence in terms of section 8 of the FAIS Act have been amended to make provision for the crypto asset product sub-category.
- A Notice, confirming the publication of the application forms, will be published on the FSCA’s website (www.fsca.co.za) before 1 June 2023.
- Having received and considered the public comment on the Draft Exemption, the most material amendment that has been made is the removal of the exemption relating to recognised qualifications (section 23 of the Determination). Following an evaluation of the existing qualifications on the list of recognised qualifications, the FSCA concluded that there are some qualifications that can be recognised for purposes of crypto assets. The list of recognised qualifications was also updated to include additional relevant qualifications, and section 23 of the Determination will therefore apply as is to Crypto Asset FSPs, their key individuals and representatives, meaning that they are required to have a qualification recognised by the FSCA, as is the case with all other FSPs. The updated List of Qualifications Recognised for Financial Services Providers, Key Individuals and Representatives that make provision for the crypto assets product sub-category is available here. An application for the recognition of a qualification (that is not currently on the list) can be included as part of a licence application under section 8 of the FAIS Act.
- The other amendments made to the draft Exemption are mostly cosmetic in nature, made for clarity purposes, or made to apply the existing requirements to crypto asset providers.
- The final Exemption of Persons Rendering Financial Services in relation to Crypto Assets from certain requirements was published on 11 May 2023.