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South Africa: Withdrawal and replacement of FSCA FAIS Notice 90 of 2022 published on 19 October 2022

25 October 2022
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We refer to our newsflash published on 20 October 2022, in which we outlined the Financial Sector Conduct Authority’s (FSCA) declaration of crypto assets as ’financial products’ in terms of the Financial Advisory and Intermediary Services Act 2002 (FAIS) (Crypto Asset Declaration).

The newsflash indicates inter alia that, to ensure a smooth compliance transition, the FSCA has published an exemption in terms of which providers of financial services related to crypto assets (Crypto Asset FSPs) are currently exempt from the FAIS licensing requirement (and, by default, from all FAIS-related requirements applicable to FSPs) as long as those providers submit FSP licence applications to the FSCA between 1 June 2023 and 30 November 2023 (Original Crypto Asset FSP Exemption).

The Original Crypto Asset FSP Exemption had included a condition where the wording suggested that exempted Crypto Asset FSPs must comply with all of the following requirements by 1 December 2023:

  • comply with Chapter 2 of the Determination of Fit and Proper Requirements for Financial Services Providers, 2017 (Determination);
  • comply section 2 of the General Code of Conduct for Authorised Financial Services Providers and Representatives, 2003 (General Code); and
  • all other requirements in the General Code with the exclusion of section 13 of the General Code.

On 21 October 2022, the FSCA published a revised exemption notice, which withdraws and replaces the Original Crypto Asset FSP Exemption (Amended Crypto Asset FSP Exemption). Notably, the Amended Crypto Asset FSP Exemption has revised the wording of the above condition to read as follows:

  • compliance with Chapter 2 of the Determination is effective from 19 October 2022;
  • compliance with section 2 of the General Code is effective from 19 October 2022; and
  • compliance with all other requirements in the General Code, with the exclusion of section 13 of the General Code must be met by 1 December 2023

While Chapter 2 of the Determination requires Crypto Asset FSPs to comply with fit and proper requirements relating to honesty, integrity and good standing, section 2 of the General Code generally imposes the duty of care on Crypto Asset FSPs.

The other aspects of the Original Crypto Asset FSP Exemption have not been materially amended.