(Ecofin Agency) - The classification is a necessary step to establish a legal framework governing the burgeoning crypto market. 

Last Wednesday, the South African Financial Conduct Authority (FSCA) classified crypto assets as financial products to facilitate regulators' oversight of this market and protect users from potential fraud.

In a notice published in the official gazette, the watchdog defined a crypto asset as “a digital representation of value,” that “is not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for payment, investment and other forms of utility.”

The classification is meant to allow for regulation of this burgeoning market in South Africa to prevent fraud, theft, money laundering, and weakening monetary policy.

For crypto exchange platform Easy Crypto’s legal lead, Brent Petersen, this is a necessary first step in bringing the crypto asset industry into the South African legal framework. 

In May 2022, South African Central Bank Deputy Governor Kuben Naidoo announced that the issuing institution was working with other regulators on crypto asset regulations that are expected to come into effect within nine to 15 months. The regulations planned by South African authorities include enforcing exchange controls and licensing cryptocurrency exchange platforms.