On January 24th, the head of enforcement at the financial industry watchdog in South Africa said that the coming weeks would see them decide the fate of license applications of 50 crypto companies.
The watchdog revealed that a total of 100 companies had submitted a license application, but 20 of them had already withdrawn their respective applications.
The watchdog
The South African financial watchdog is the Financial Sector Conduct Authority (FSCA) and it announced crypto license applications on January 24th.
The decision on the applications submitted by more than 90 companies will be decided in the coming weeks.
Gerhard van Deventer, an official with the FSCA, revealed that 20 of the applicants had opted to withdraw their applications.
Just days before the deadline of November 30th, the South African financial watchdog revealed that they had received about 93 applications from crypto companies.
Ultimately, the number had increased to 105 and included both fresh applicants as well as those who already hold FSP licenses.
The compliance head at the FSCA, Disketsho Mashigo, had said at the time that some of the applicants had decided not to pursue the license.
Some of these applicants eventually agreed to offer their services outside of the South African crypto market.
The reasons
During a podcast, Deventer remarked that he agreed with the implication that the cost of the license might have spooked some of the companies to withdraw their applications.
Getting a financial service provider (FSP) license is costly and this might have pushed some applicants to back out of the process.
The head of enforcement at the FSCA, however, had a different opinion. He said that the burden of the license may have driven some of the applicants to withdraw.
According to Deventer, many of the applicants did not have a realistic chance of meeting one crucial requirement of the regulator.
The requirement
According to the FSCA’s Head of Enforcement, the requirement of having a key individual may have been a problem.
This is because the individual would need to have relevant and a very specific experience, skills, and qualifications.
He added that this can be quite difficult because crypto has not been around for very long and finding someone who fits these requirements is challenging.
Deventer added that some companies facing this situation had stated that they would reapply for the license once they managed to fulfill this requirement.
The FSCA has also proposed some changes to be made to regulations that apply to the crypto industry.
Deventer stated that the reason for the amendments was to address scammers who deliberately operate outside the regulatory scenario.
According to Deventer, once the new regulations are implemented, such entities would not be able to avoid the regulation of their activities.