South Africa Issues Crypto Licenses: Luno and Zignaly Lead the Way
In a groundbreaking move for the South African financial landscape, the country’s regulatory body has begun issuing licenses to cryptocurrency firms. Among the initial recipients are prominent players in the industry: exchange platform Luno and decentralized social investing marketplace Zignaly. This development marks a significant step towards integrating cryptocurrencies into the regulated financial sector of South Africa.
Luno Secures Regulatory Approval
Luno, a leading cryptocurrency exchange platform, disclosed that it had secured approval as a financial service provider under the country’s Financial Advisory and Intermediary Services Act, 2002 (FAIS). With this authorization, Luno PTY LTD now proudly stands listed on the Financial Sector Conduct Authority’s (FSCA) registry of authorized entities. This achievement underscores Luno’s commitment to compliance and customer security, which has been pivotal in driving its growth trajectory.
Similarly, Zignaly, a decentralized social investing marketplace, revealed that it had obtained a Category 2 – Discretionary Financial Service Provider (FSP) license. Operating under the entity Merritt Administrators PTY LTD, Zignaly’s inclusion in the FSCA registry solidifies its position within the regulated financial landscape of South Africa.
The journey towards regulatory approval commenced in June 2023 when South Africa enacted legislation to bring cryptocurrencies within the purview of regulated financial activities. The FSCA, responsible for overseeing compliance within the financial sector, initiated the process of accepting licensing applications from crypto firms. Notably, the regulatory body has issued stern warnings against operating without obtaining the requisite approvals, emphasizing the imposition of hefty fines for non-compliance.
It is anticipated that approximately 60 firms will receive approval from the regulator in the near term, signifying a broader embrace of cryptocurrencies within the South African financial ecosystem.
Industry Perspectives: Compliance and Innovation
Commenting on the significance of this milestone, Christo de Wit, Luno’s country manager for South Africa, remarked, “This is a positive step for both the cryptocurrency industry and South Africans. Compliance, safety, and security for our customers have driven our growth since the beginning and will continue to be priorities as we expand our offering to introduce more features and products for financial institutions.”
Zignaly’s Category 2 license grants the company the authority to engage in discretionary fund management, wherein it is empowered to make investment decisions on behalf of investors. Notably, the license also permits Zignaly to act as a custodian of funds for its clients, representing a comprehensive asset management capability akin to traditional financial giants such as Blackrock or Vanguard.
In a press statement, Zignaly highlighted the strategic importance of its licensing, stating, “It is essentially a full asset management license, comparable to what TradFi behemoths like Blackrock or Vanguard have at their disposal.” Furthermore, Zignaly anticipates that the license will enable it to anticipate and adapt to the likely extension of regulations to decentralized finance (DeFi). The company’s foresight in regulatory compliance was evident in 2022 when it secured a $50 million financing deal with a Luxembourg-based fund.
The issuance of licenses to Luno and Zignaly heralds a new era of legitimacy and regulation within South Africa’s cryptocurrency industry. As the regulatory framework continues to evolve, these pioneering firms set a precedent for compliance and innovation, laying the foundation for a robust and inclusive financial ecosystem that embraces digital assets.
