VALR, a cryptocurrency exchange based in South Africa, has obtained new licenses from the Financial Sector Conduct Authority (FSCA), allowing it to offer crypto asset services. The licenses, known as CASP licenses, were granted under the new requirements set by the FSCA for industry firms. With these licenses, VALR has become one of the first cryptocurrency companies in the country to receive both Category I and II licenses.
VALR’s co-founder and CEO, Farzam Ehsani, stated that securing the CASP licenses was a significant milestone for the exchange. He also emphasized the company’s commitment to compliance, security, and providing a trustworthy platform for the crypto community. Ehsani praised the regulators for taking this important step for South Africa and expressed his support for the nation’s regulatory milestone.
The FSCA opened license applications in June 2023, giving crypto asset service providers six months to apply for compliance with South African regulations. Under the country’s Financial Advisory and Intermediary Services Act, companies were required to apply for a license by November 2023. Ehsani explained that a CAT I license is the standard license for a CASP in South Africa, allowing the provider to offer advice and exchange services. On the other hand, a CAT II license, or discretionary mandate license, enables licensed providers to structure customers’ portfolios based on their discretion, opening up opportunities for VALR to explore new product categories.
The regulatory framework aims to protect customers and investors and allows regulators to take enforcement action in case of compliance failures. South Africa has become the first African country to formally license cryptocurrency exchanges through these frameworks, which have been in development since 2021.
In March 2024, the FSCA approved 59 license applications from cryptocurrency platforms, indicating progress in the licensing process. Furthermore, the Advertising Regulatory Board in South Africa updated its requirements in January 2023 to address the growing popularity of cryptocurrency investing. These changes were made to protect consumers from unethical advertising practices and required companies and individuals to adhere to certain advertising standards when promoting cryptocurrency products and services. The amended rules also applied to social media influencers, ensuring that advertising is easily understandable and provides balanced information about the associated risks and benefits.