South Africa is reportedly preparing to issue the first batch of financial services provider (FSP) licences to crypto service providers.

Gerhard van Deventer, head of enforcement at South Africa’s Financial Sector Conduct Authority (FSCA), confirmed the move speaking at a podcast on Moneyweb Crypto.

He noted that the move would curb any crypto-related scams. “That will make it easier to shut down crypto scammers before they get started,” he noted.

This is a timely move, as South Africa’s fraud cases on the crypto sector surged by 25% during the last quarter of 2023, per research findings from Sumsub.

Van Deventer further noted that FSCA received applications from 128 crypto firms that are already up and running. According to him, the regulator saw overwhelming responses from crypto service providers between June 1 and November 30, 2023. The regulator opened the registration window following the announcement in October 2022, declaring cryptocurrencies as financial products.

South Africans Cash Out Cryptos

The decision for crypto licence approval comes at a time when South Africans are increasingly turning to digital currency payments. Per a recent data from the FSCA, 10% or 6 million locals hold cryptos in the country.

Also, there has been an increase in South Africans withdrawing cash from crypto ATMs across the nation. This is due to a recent collaboration between global payment company Paycorp and Triple-A. The partnership allowed users to use their cryptos to make cash withdrawals at over 3,000 ATMs in South Africa.

Furthermore, local crypto service providers are also eagerly anticipating the approval of crypto licences to those who qualify. Christo De Wit, Luno country manager for South Africa, said that the regulators are in the “right direction.”

“The requirement for licensing is a move in the right direction as it validates the operations of crypto companies.”

Another crypto service provider Cedric Jeannot, CEO of neobank Be Mobile Africa that introduced pay-with-crypto option for customers, noted that the move will contribute to the the nation’s growth in the crypto space.

“By introducing licensing, the government is pushing for proper regulation which serves the commercial interests of all parties in the ecosystem positively,” he told a local publication.