On 19 October, 2022, the Financial Sector Regulatory Authority (FSCA) issued a notice
declaring that “crypto assets” were to be classified as “financial products” for the purposes of
the Financial Advisory and Intermediary Services (FAIS) Act.
A “crypto asset” is defined in the notice as “a digital representation of value that –
is not issued by a central bank, but is capable of being traded, transferred or stored electronically for the purpose of payment, investment and other forms of utility;
applies cryptographic techniques (techniques of securing information and communications through use of codes so that only those persons for whom the information is intended can understand it and process it); and
uses distributed ledger technology (a digital system for recording transactions in which the transactions and their details are recorded in multiple places at the same time.)”.
The consequence of the declaration is that, with immediate effect, no person may offer any
recommendation, guidance or proposal of a financial nature furnished, by any means or
medium, to any client or group of clients in respect of:
the purchase of a crypto asset,
investment in a crypto asset;
any other transaction, aimed at the incurring of any liability or the acquisition of any right or benefit in respect of a crypto asset (including a including a loan or cession) ;
or
the variation of any term or condition applying to a crypto asset,
the replacement of any crypto asset, or
the termination of any purchase of or investment in any crypto asset,
unless that person is in possession of a licence, issued by the FSCA in terms of section 8
of the FAIS Act, authorising that person to act as a financial services provider.
Financial services providers who wish to provide advice in relation to crypto assets will be
obliged to apply for authorisation under the FAIS Act between 1 June and 30 November
2023. The FSCA has given financial services providers who currently provide advice in
relation to crypto assets an exemption from the licensing requirements provided that they
apply for authorisation during that period.
Ian Jacobsberg
