Cryptocurrency businesses in South Africa are regulated by the FSCA, which needs close cooperation with the Regulator during all stages of obtaining the FSP license.
Step 1: Registration of the legal entity – The creation of a legal entity (Pty, Ltd) is carried out at the online portal of the Companies and Intellectual Property Commission (CIPC) and takes up to 3 days.
Step 2: Selection of Key Manager – Operational management personnel and AML managers must pass a fit and proper test, have work experience, and prove their business reputation and competence.
Step 3: Set Up a Local Office – One of the conditions is the availability of a physical office where documents will be stored nd checked and business operations will be carried out.
Step 4: Prepare a Description of Implementation of AML/CFT mechanism – The regulator must ensure that companies comply with financial transparency rules, international FAFT standards, transaction monitoring, and fraud detection, reporting, and timely submission of reports.
Step 5: Register with the FIC – The company’s activities and compliance must comply with anti-money laundering legislation.
Step 6: Submission of an Application to the FSCA – The FSCA application must be accompanied by a complete set of documents consisting of
- The company’s founding documents
- Personal data of key managers with confirmation of their place of residence.
- Minutes of the appointment of managers and the AML manager.
- Detailed business plan.
- Implementation of AML /CFT Framework policies
- Description of IT infrastructure, data protection measures, encryption protocols used, etc.
- Proof of financial stability.
The FSCA interviews senior managers, assesses the completeness of the data and documentation, evaluates financial monitoring mechanisms, and assesses the level of customer data protection.
FSCA Crypto License Requirements
After the FSCA officially defined the status of cryptocurrencies in 200, all brokers, exchanges, services, and providers involved in financial services involving crypto currencies must obtain an FSP license and comply with a number of compliance and IT infrastructure requirements.
The main crypto license requirements in South Africa include:
- Registration of a Profitable Business Entity: According to the law, only commercial companies have access to the license: Private (Pty Ltd) and Public Companies (Ltd). Depending on the type of company, a certain number of founders or directors are required (for private companies, 1 or more, for public companies, 3 or more). Registration takes place at the CIPC within 1 – 3 days.
- Obtaining FSP license with Crypto Assets Products: Financial services such as trading, exchange, issuance, and distribution of financial token are subject to licensing by teg FSCA. The review process takes 6 to 12 months. The main criteria are honesty in conducting business activities and the reliability of the company, as specified in (Fit and Proper Requirements, Board Notice 194, 80).
- Registration with the FIC: The Financial Intelligence Centre (FIC) monitors the company’s activities, AML/CFT compliance, transaction monitoring, risk management, and reporting.
- Prove Financial Stability: There is a minimum capital requirement in the legislation, but when applying, the company must demonstrate sufficient financial liquidity, have insurance reserves, and a plan to cover expenses and risks.
- Comply with FAFT Recommendation: Financial market participants are required to comply with all AML/CFT procedures and appoint an AML manager to liaise with the FIC.
- Legal Address: The regulator requires companies to have a physical office for storing documents and undergoing audits and inspections.
- Comply with data protection and cybersecurity regulations: The company is required to provide customers with a secure IT infrastructure that uses data encryption protocols, multi-factor authentication, backup, and confidentiality standards for customer data.
We prepare all supporting documents and application forms and submit them to the FSCA on your behalf.
For more information, contact us at info@mctg-consulting.co.za
