Regulation
🟠 South Africa’s message to the rest of Africa
July 9, 2024 at 10:01 a.m.
Updated: July 9, 2024 at 12:48 p.m.
5 minutes reading time
More: 🇿🇦 South Africa grants 63 new crypto licenses 🏛️ FSCA chief outlines principles-based regulation 🇳🇬 CBN official testifies against Binance 🛠️ Fuse Network launches $10,000 summer hackathon
Hi
This is Oluwaseun, the editor here at Mariblock.
Welcome to Mariblock Weekly, where we bring you the most important developments in the African blockchain scene over the past week.
I think we can safely call this edition of MB Weekly the South African edition. Quite frankly, no other country on the continent produces as many headlines about blockchain and cryptocurrencies as South Africa.
Well, there is the ongoing legal battle between Nigeria and Binance, which continues to see Binance staff member Tigran Gambarya locked up.
In some ways, the two stories are similar in that they become a textbook case of how to regulate or not regulate a nascent market. In South Africa, a progressive regulatory stance attracts builders and investment. In Nigeria, builders flee, as do the investments they attract.
Let’s go!
Stay informed about the latest blockchain developments in Africa
South Africa Grants 63 New Cryptocurrency Licenses, Also Launches 30 Cryptocurrency-Related Investigations
Top line: The Financial Sector Conduct Authority (FSCA) of South Africa has significantly expanded its list of approved crypto asset service providers (CASPs), approving 63 new applications in Q2 2024.Details)
The details: As of June 30, 2024, the total number of licensed CASPs in South Africa was 138, compared to 75 in April 2024, the FSCA said in a July 2 statement. Press release.
- The FSCA has received a total of 383 CASP licence applications since the process began on 1 June 2023.
- The regulator rejected five applications, while 80 applicants withdrew voluntarily following discussions with the FSCA about the suitability 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 here.
🫧 Oluwaseun’s thought bubble: Like I written on LinkedInThe most remarkable part of the new licenses for me is that Kotani Payment — originally founded in Kenya by Kenyans — is now licensed in South Africa.
- Kenya currently has no regulatory framework for cryptocurrencies, despite positive developments over the past year, including lawmakers asking the Blockchain Association of Kenya to draft a bill.
- In one of last year’s weekly Mariblock newsletters, I wrote “Clear and favorable regulation will determine Africa’s crypto hub.”
- South Africa, while not there yet, is certainly on the right track. So it is no surprise to see Kotani Pay moving its base to South Africa.
Gear switch : The FSCA is not only increasing the number of approved CASPs; it is also strengthening the enforcement of its regulations.
From Rigid Rules to Flexible Principles: South Africa’s Approach to Financial Innovation
Top line:Financial Sector Conduct Authority (FSCA) Commissioner Unathi Kamlana delivered a high-profile public lecture at North-West University on 26 June 2024, addressing South Africa approach aimed at striking a balance between promoting innovation in the financial sector and maintaining effective regulatory oversight.Details)
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Revealing Quote“The future requires us to be both proactive and adaptive, continually evolving our approaches to keep pace with technological advances,” Kamlana said. “This will involve adopting new regulatory frameworks, leveraging advanced technologies for surveillance, and maintaining a flexible mindset to adapt to rapid changes in the industry.”
The details: In a bid to match words with actions, Kamlana said the FSCA is moving towards a principles-based regulatory approach.
- This approach aims to ensure fair treatment of customers rather than prescribing detailed rules.
- According to one academic journal, principles-based regulation involves three key elements:
- Broad-based standards that emphasize high-level rules, stated in general terms, rather than detailed rules.
- Outcome-oriented regulation that focuses on achieving desired outcomes for consumers and the financial system.
- Increase senior management accountability to hold senior executives accountable for regulatory compliance.
To note : The FSCA regulations place significant supervisory responsibilities on “key persons”, which include senior managers.
- In a recent publication on regulatory action, the FSCA reaffirmed its commitment to holding key individuals to account.
- Earlier in 2024, an FSCA official confirmed that some withdrawn crypto license applications were linked to a lack of key personnel.
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 conducting transactions using pseudonyms, potentially complicating the ongoing legal case against the cryptocurrency exchange.Details)
The details: Olubukola Akinwumi, Deputy Director of the CBN, testified before the Federal High Court in Abuja on July 5, 2024.
- Akinwumi said Binance users in Nigeria often use pseudonyms to hide their identities when trading.
- The testimony is part of the ongoing trial against Binance and its CEO, Tigran Gambaryan, who are accused of money laundering involving $35.4 million.
- Akinwumi stressed that Binance is not licensed to operate in Nigeria and its services related to naira deposits and withdrawals are regulated activities usually carried out by institutions registered with the CBN.
🫧 Oluwaseun’s thought bubble: The stark contrast between Nigeria and South Africa’s approaches to cryptocurrency regulation is becoming increasingly significant, and its effects are becoming more apparent by the day.
- South Africa’s progressive attitude attracts innovation and investment, while Nigeria’s more restrictive approach appears to drive away talent and opportunity.
- Some of the most talented entrepreneurs I know have decided to focus on something other than Nigeria. There is a growing trend towards “building for the world” rather than focusing on Nigeria or even Africa in particular.
- On the surface, this isn’t particularly a bad thing. However, when you consider that these founders are primarily mission-driven, you start to realize that this is a loss. Furthermore, it means that these founders are moving the investments they attract elsewhere.
Catch up
🇳🇬 Cryptocurrency exchange KuCoin imposes 7.5% VAT on transaction fees for Nigerian users (Mari Block)
🇿🇦 South Africa announces 30 investigations into cryptocurrency activities (Mari Block)
🇳🇬 Binance vs Nigeria: A timeline of events as they unfold (Mari Block)
🇰🇪 Worldcoin resumes operations as Kenyan police drop investigations (Mari Block)
🇳🇬 Nigeria to launch nationwide AI and blockchain research center (Mari Block)
🇳🇬 Nigeria’s SEC Announces Regulatory Sandbox for Cryptocurrency Firms (Mari Block)
Opportunities
Fuse network is hosting its 2024 summer hackathon from July 15 to August 4, with a prize pool of $10,000.Details )
It’s all for this week.
See you next week.
Cheers,
Oluwasun.