South Africa Leads Crypto Regulation with New CASP Licenses

South Africa is setting a new standard in cryptocurrency regulation with its Crypto Asset Service Provider (CASP) licenses. Introduced by the Financial Sector Conduct Authority (FSCA), these licenses ensure businesses offering crypto-related services meet strict compliance standards. Here’s what you need to know:

• Timeline: The licensing process began in June 2023, with applications required by November 30, 2023. All licensed providers must meet final requirements by June 30, 2025.
• Progress: As of December 2025, 512 applications were submitted, with 300 approved. The FSCA has also launched investigations into unlicensed activities.
• Requirements: Applicants must follow the Financial Advisory and Intermediary Services (FAIS) Act, pass regulatory exams, and demonstrate readiness through detailed business plans and compliance measures.
• Impact: CASP licenses provide clarity for crypto businesses, attracting institutional investments and enabling growth in South Africa’s digital asset market.

This initiative positions South Africa as a leader in crypto regulation, balancing consumer protection with market development.

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What CASP Licenses Are and How They Work

South Africa has introduced a groundbreaking regulatory system for cryptocurrency, and at the heart of this framework is the CASP license. This license allows crypto businesses to legally provide financial services related to digital assets. These services include offering advice on crypto investments, facilitating transactions between parties, and managing crypto portfolios on behalf of clients. Businesses that typically require a CASP license include crypto exchanges, custodial and wallet providers, payment gateways, index providers, and online trading platforms. It’s important to note that while crypto assets are regulated, they are still not recognized as legal tender. Instead, they are classified as digital representations of value secured by cryptography.

To obtain a CASP license, providers must meet rigorous “fit and proper” standards. This involves submitting comprehensive business plans, implementing robust risk management systems, demonstrating proven expertise in cryptocurrency, and ensuring that key personnel pass regulatory examinations. The deadline for meeting these requirements is June 30, 2025.

In April 2024, South African crypto platform VALR became one of the first to secure both Category I and Category II licenses from the FSCA. These licenses enable VALR to operate as a licensed Financial Services Provider (FSP #53308), providing exchange, wallet, and custodial services. VALR’s CEO, Farzam Ehsani, shared his thoughts on this milestone:

“Obtaining the CASP license from the FSCA is a monumental achievement for VALR. Over the past six years, we have actively collaborated with the South African regulators who have now pioneered a regulatory regime, allowing innovation to flourish while protecting the public interest”.

How to Apply for a CASP License

South Africa’s regulatory framework ensures a thorough process for obtaining a CASP license. Here’s what you need to know to navigate the application process.

To apply, you must comply with the Financial Advisory and Intermediary Services (FAIS) Act. The requirements vary depending on whether you’re an existing Financial Service Provider (FSP) or a new entity. Existing FSPs, such as banks or brokers, can simply apply to extend their current license to cover crypto asset services. On the other hand, new entities must submit a full license application to the Financial Sector Conduct Authority (FSCA).

The application process spans about 14 weeks and is divided into three phases: documentation (2 weeks), setup (4 weeks), and filing (8 weeks). During the documentation phase, applicants gather notarized identification documents. The setup phase involves registering the company, creating an AML/CFT risk register, and appointing three key roles: a Key Individual (KI), a Compliance Officer, and an external Auditor. Finally, the filing phase involves submitting the application to the FSCA and addressing any regulatory queries until approval is granted. These steps highlight the FSCA’s focus on ensuring crypto businesses meet compliance standards before entering the market.

Your application must demonstrate three core capabilities: operational ability (a detailed business plan that incorporates crypto activities), proven competency in managing crypto asset risks, and FICA compliance, which includes registering as an accountable institution with strong AML/CTF controls. For high-risk business models like exchanges and custodial services, the FSCA conducts on-site inspections to verify that operations are “crypto-ready”.

Applications can be rejected if they fail to meet competency or operational standards. As of December 10, 2024, the FSCA had received 420 applications, of which 248 were approved, 9 were declined, and 106 were voluntarily withdrawn after discussions revealed that their business models were unsuitable. Felicity Mabaso, Divisional Executive for Licensing at the FSCA, detailed common issues:

“Reasons included an inability to show compliance with the competency requirements, a lack of clear and comprehensive business plans, policies, processes and a general lack of operational readiness to conduct crypto-asset related services”.

All licensed CASPs and their key individuals must pass the required Regulatory Examinations (REs) by June 30, 2025. Missing this deadline could lead to license suspension or withdrawal. Furthermore, providing crypto services without a license can result in administrative fines of up to ZAR 10 million (about $550,000). For those seeking assistance, full-service licensing support – including company formation and policy development – costs approximately €16,000 ($17,000). Alternatively, acquiring a pre-licensed FSP company with a derivatives license was priced at €200,000 ($212,000) as of June 2025.

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CASP License Application Data and Approval Rates

Since June 2023, the FSCA has processed 512 CASP applications, approving 300 of them – a 21% jump compared to December 2024 figures. This growth highlights the evolving regulatory landscape and its increasing influence within the industry. These numbers build on earlier milestones, reflecting steady progress in licensing efforts.

The data also emphasizes the FSCA’s stringent standards. Out of the total applications, 14 were formally declined, while 121 were voluntarily withdrawn after regulatory engagement. This suggests that many businesses, upon realizing they couldn’t meet the “fit and proper” criteria, opted to exit the process instead of facing rejection.

Currently, 77 applications are under review. Meanwhile, the FSCA has launched 81 investigations into unlicensed crypto activities, with 56 cases actively being pursued. The FSCA has made its stance clear: “Any institution or person found to be conducting CASP-related activities without a license will be subject to enforcement action”. Additionally, the authority completed 21 of 30 planned FICA supervisory inspections for the April 2025 to March 2026 cycle, focusing on governance and anti-money laundering compliance among newly licensed providers. This enforcement activity underscores the importance of adhering to regulations, especially for those seeking to reapply.

For applicants whose submissions were declined or withdrawn, achieving full compliance is mandatory before reapplying. With an approval rate of about 59% (300 approved out of 512 applications), the FSCA demonstrates its commitment to maintaining high standards and ensuring market integrity.

How CASP Licenses Affect South African Fintech Companies

The introduction of the CASP licensing framework has reshaped the way fintech companies operate in South Africa. With regulatory clarity now in place, legitimate crypto businesses can shift their focus toward sustainable growth without the looming uncertainty of unclear regulations. Even traditional financial institutions, which previously avoided the crypto space, are joining the conversation. They’re attending industry events and assembling dedicated teams to explore opportunities in this evolving market. As Ashlin Perumall, Partner at Baker McKenzie, pointed out, this regulatory clarity has greatly enhanced the credibility of the industry, setting the stage for more rigorous operational standards.

Obtaining a CASP license isn’t a simple process – it demands adherence to strict criteria. Companies must prove their “crypto-readiness” by presenting robust business plans, demonstrating effective risk management strategies, and ensuring compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. The Financial Sector Conduct Authority (FSCA) takes these requirements seriously, conducting detailed assessments, including on-site inspections for exchanges and custodial services. Only businesses that meet high standards for security and governance earn approval.

The results speak for themselves. Leading companies have already used the framework to secure licenses, enabling them to expand their offerings and reach across Africa. This regulatory structure has also positioned South Africa as a key gateway for digital assets on the continent. The appeal of clear regulations has drawn substantial institutional capital, with transactions valued between $1 million and $10 million dominating crypto activity by mid-2024.

A standout example of this progress is Mesh, which became Africa’s first fully licensed platform for tokenizing financial assets in July 2024. Mesh facilitated the issuance of a 10-year corporate bond for “Die MOS” using its license. Connie Bloem, Managing Director of Mesh, remarked:

“Our license means we are a fully regulated crypto asset platform that can facilitate the issuance, trade and management of tokenized financial assets. This is an important milestone for the continent.”

South Africa’s adoption of a hybrid regulatory model, which extends the FAIS and FICA frameworks to crypto assets, has set a powerful example for other African nations. This balanced approach between fostering innovation and ensuring consumer protection has solidified South Africa’s position as a regulatory leader on the continent.

Conclusion

South Africa has taken a bold step in shaping cryptocurrency regulation with its groundbreaking CASP licensing framework. By classifying crypto assets as “financial products” under the Financial Advisory and Intermediary Services (FAIS) Act, the country has created a clear and structured path for businesses to operate with legitimacy and regulatory certainty. The Financial Sector Conduct Authority (FSCA) has implemented a rigorous approval process, allowing only qualified, crypto-ready operators into the market. This approach not only protects consumers but also ensures the integrity of the market, laying a solid foundation for future growth.

This regulatory clarity has elevated South Africa’s position in the global crypto landscape. Traditional financial institutions are now entering the space, assembling specialized teams and exploring new opportunities within this well-defined framework. Between late 2023 and Q1 2024, institutional transactions – ranging from $1 million to $10 million – became the largest driver of crypto activity, underscoring the confidence inspired by clear regulations. Major players like Absa have even introduced gold-backed stablecoins to meet growing demand in this regulated environment. These advancements mark a significant turning point for the industry.

Looking ahead, South Africa is poised to refine its regulatory approach further. The Conduct of Financial Institutions (COFI) Bill, slated for implementation by 2027, aims to enhance oversight and strengthen market integrity. These ongoing efforts position South Africa as not just a regional leader but a global example of how to balance innovation with consumer protection in the crypto space.

The success of this framework proves that well-thought-out regulation can fuel growth rather than hinder it. By setting clear rules, conducting thorough evaluations, and prioritizing security and governance, South Africa has created an environment where legitimate crypto businesses can flourish. This strategy has solidified the country’s role as a key hub for digital assets in Africa, attracting institutional investment and offering a model for other nations navigating the complexities of cryptocurrency regulation.

FAQs

What advantages do businesses gain from obtaining a CASP license in South Africa?

Obtaining a Crypto Asset Service Provider (CASP) license from South Africa’s Financial Sector Conduct Authority (FSCA) gives businesses a solid legal foundation and boosts their credibility. With this license, providers are formally recognized under the Financial Advisory and Intermediary Services Act, which means customers benefit from protections similar to those found in traditional financial services. This regulatory framework builds trust, encouraging more involvement from investors, banks, and fintech startups in the crypto market.

Licensed CASP providers are also required to adopt strong governance practices, implement effective risk management, and enforce strict security protocols. This includes customized anti-money laundering (AML) and counter-terrorism financing (CTF) policies. These measures not only enhance operational safety but also establish businesses as dependable and professional players in the digital asset industry. Such credibility opens doors to institutional investments and partnerships with established financial institutions, fueling growth in South Africa’s expanding crypto landscape.

How do CASP licenses impact banks and financial institutions in South Africa?

The introduction of CASP (Crypto Asset Service Provider) licenses has changed the way South African banks and financial institutions handle crypto-related activities. Now, these activities are treated as a regulated business area. To provide services like crypto advisory, custody, exchanges, or tokenization, institutions must secure a CASP license under the Financial Advisory and Intermediary Services Act. The Financial Sector Conduct Authority (FSCA) carefully reviews each application, examining key aspects such as business plans, risk management policies, governance structures, security protocols, and compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. If these standards aren’t met, institutions are prohibited from offering crypto services until they fully comply.

Beyond licensing, new compliance measures like Directive 9 require banks to collect, verify, and securely share transaction details for crypto transfers, whether within South Africa or across borders. To meet these requirements, banks need to upgrade their systems, train staff on crypto-specific processes, and embed crypto risk management into their daily operations. These updates aim to boost transparency, strengthen oversight, and build greater trust in South Africa’s financial system.

What obstacles do businesses face when applying for CASP licenses in South Africa?

Businesses looking to secure a Crypto Asset Service Provider (CASP) license in South Africa encounter significant hurdles due to the strict standards enforced by the Financial Sector Conduct Authority (FSCA). A key requirement is submitting a well-structured business plan that outlines operations clearly, along with proof of sufficient operational capacity to manage crypto-related activities. Many applicants fall short of these benchmarks, leading to rejected applications.

Another major challenge is demonstrating that key team members possess the required cryptocurrency expertise and hands-on experience. Beyond this, the FSCA scrutinizes risk management strategies, governance structures, and anti-money laundering (AML) protocols. Companies must also establish strong security measures and be ready for on-site inspections. These stringent demands often push businesses to withdraw their applications early when they realize they cannot meet the compliance criteria.

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