Regulation
🟠 South Africa’s message to the rest of Africa
Jul 9, 2024 at 10:01 AM
Updated: Jul 9, 2024 at 10:14 AM
5 minute read
Also: 🇿🇦 South Africa Grants 63 New Crypto Licenses 🏛️ FSCA Chief Outlines Principles-Based Regulation 🇳🇬 CBN Official Testifies Against Binance 🛠️ Fuse Network Launches $10K Summer Hackathon
HI
I am Oluwaseun, the editor-in-chief of Mariblock.
Welcome to Mariblock Weekly, where we bring you the most important developments in the African blockchain landscape over the past week.
I think we can safely call this edition of MB Weekly the South African edition. Frankly, no other country on the continent produces high-signal blockchain and cryptocurrency stocks like South Africa.
Well, the legal battle between Nigeria and Binance continues, with Binance staff member Tigran Gambarya still in prison.
In a way, the two stories are similar in that they are becoming a case study in how and how not to regulate a nascent market. For South Africa, a progressive regulatory stance is attracting developers and investment. In Nigeria, developers are fleeing, and so is the investment that developers attract.
Let’s start!
Stay up to date with the latest blockchain developments in Africa
South Africa Grants 63 New Crypto Licenses, Launches 30 Crypto-Related Investigations
Top line: The Financial Sector Conduct Authority (FSCA) South Africa significantly expanded its list of Authorized Cryptocurrency Service Providers (CASPs), approving 63 new applications in the second quarter of 2024.Details)
The details: As of 30 June 2024, the total number of authorised CASPs in South Africa was 138, up from 75 in April 2024, the FSCA said in a statement on 2 July. Press release.
- Since the start of the procedure on 1 June 2023, the FSCA has received a total of 383 CASP licence applications.
- The regulator rejected five applications, while 80 applicants voluntarily withdrew after discussions with the FSCA about the appropriateness of their business models.
- The remaining applications are still under consideration by the regulator.
- We have published the full list of news licenses on LinkedIn. Check it out here.
🫧 Oluwaseun’s comic: Like me wrote on LinkedInthe most notable part of the new licenses for me is that Pay Kotani — originally founded in Kenya by Kenyan citizens — is now licensed in South Africa.
🫧 Oluwaseun’s comic: Like me wrote on LinkedInthe most notable part of the new licenses for me is that Pay Kotani — originally founded in Kenya by Kenyan citizens — is now licensed in South Africa.
- Kenya currently has no cryptocurrency regulatory framework, despite positive developments last year, including lawmakers calling on the Blockchain Association of Kenya to draft a bill.
- In one of Mariblock’s weekly newsletters last year, I he wrote that “clear and supportive regulation will shape Africa’s crypto hub.”
- South Africa, while not quite there yet, is certainly on the right track. So it’s no surprise to see Kotani Pay effectively move its base to South Africa.
Changing gear: The FSCA is not only expanding the number of authorised CASPs, but is also stepping up enforcement of its regulations.
From Hard Rules to Flexible Principles: South Africa’s Approach to Financial Innovation
Top line:The Commissioner of the Financial Sector Conduct Authority (FSCA), Unathi Kamlana, held a broad public lecture at the North-West University on 26 June 2024, addressing South Africa approach aimed at finding a balance between promoting innovation in the financial sector and maintaining effective regulatory oversight.Details)
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Revealing quote: “The future demands that we as regulators should be both proactive and adaptable, continually evolving our approaches to keep pace with technological advances,” Kamlana said. “This will involve adopting new regulatory frameworks, leveraging advanced technologies for oversight, and maintaining a flexible mindset to accommodate rapid changes in the industry.”
The details: Kamlana said that in an effort to match words with actions, the FSCA is moving towards a principles-based regulatory approach.
- This approach focuses on ensuring fair treatment of customers rather than prescribing detailed rules.
- According to an academic journal, principle-based regulation involves three key elements:
- Broad standards that favor high-level, broadly defined rules over detailed ones.
- Results-based regulation, focused on achieving desired outcomes for consumers and the financial system.
- Increase senior management accountability so that top executives are held accountable for regulatory compliance.
Of note: The FSCA rules place significant supervisory responsibilities on “key persons”, including senior management.
- In a recent publication on regulatory action, the FSCA reiterated its seriousness in holding key people to account.
- In early 2024, an FSCA official confirmed that the withdrawal of some crypto license applications was due to a lack of key people.
Nigerian Central Bank Official Testifies Against Binance in Ongoing Legal Battle
Top line: A Central Bank of Nigeria (CBN) official has testified that Nigerian Binance users are transacting under pseudonyms, potentially complicating the ongoing lawsuit against the cryptocurrency exchange.Details)
The details: Olubukola Akinwumi, Deputy Director of CBN, testified before the Federal High Court in Abuja on July 5, 2024.
- Akinwumi said that Binance users in Nigeria often use pseudonyms to hide their identities while trading.
- The testimony is part of the ongoing trial against Binance and its executive, Tigran Gambaryan, who are accused of laundering money worth $35.4 million.
- Akinwumi stressed that Binance is not licensed to operate in Nigeria and that its naira deposit and withdrawal services are regulated activities, usually carried out by institutions registered with the CBN.
🫧 Oluwaseun’s comic: The stark contrast between Nigeria and South Africa’s approaches to cryptocurrency regulation is becoming increasingly significant.
- Some of the most talented builders I know have shifted their focus away from Nigeria. There is a growing sense of “building for the world” rather than focusing on Nigeria or even Africa specifically.
- On the surface, this isn’t a particularly bad thing. However, when you put into context that these builders are mostly mission-driven, you start to realize how much of a loss this is.
Increase
🇳🇬 Cryptocurrency exchange KuCoin imposes 7.5% VAT on transaction fees for Nigerian users (Maritime Blockade)
🇿🇦 South Africa announces 30 investigations into crypto activities (Maritime Blockade)
🇳🇬 Binance vs Nigeria: A Timeline of Events as They Unfold (Maritime Blockade)
🇰🇪 Worldcoin to resume operations as Kenyan police abandon investigation (Maritime Blockade)
🇳🇬 Nigeria to launch nationwide AI and blockchain research hub (Maritime Blockade)
🇳🇬 Nigerian SEC Announces Regulatory Sandbox for Cryptocurrency Firms (Maritime Blockade)
Opportunity
Fuse network will host its 2024 Summer Hackathon from July 15 to August 4, with a prize pool of $10,000.Details )
That’s all for this week.
I’ll see you next week.
Greetings,
Oluwaseun.