South African exchange VALR has won dual crypto licenses

South African cryptocurrency exchange VALR has been granted a new crypto asset service provider (CASP) license following new requirements for industry firms from the Financial Sector Conduct Authority (FSCA).

VALR — which received $55 million in equity funding from Pantera Capital, Coinbase Ventures and others — has received Category I and II CASP approval from the FSCA. This makes VALR one of the first cryptocurrency companies in the country to receive the two licenses.

Speaking to Cointelegraph, VALR founder and CEO Farzam Ehsani said obtaining CASP approval from FSCA is a major milestone for the exchange.

The company is actively working with South African regulators to develop and implement a regulatory framework that promotes the growth of the cryptocurrency and blockchain sector while ensuring investor protection.

Related: South Africa to order crypto exchange licenses by end of 2023: report

“Our license underscores our unwavering commitment to compliance, security and providing a trusted platform for the crypto community. We welcome this regulatory milestone for South Africa and applaud the regulators for taking this important step for the country,” Ehsani said.

The FSCA opened license applications in June 2023, giving crypto asset service providers six months to apply for a license to comply with South African regulations. Companies had until November 2023 to apply and would be regulated under the country's Financial Advisory and Intermediary Services Act.

Ehsani also explained the difference between the two license categories. A CAT I license is a standard Financial Service Provider (FSP) license required for a CASP in South Africa to provide advice or services to its clients.

“A CAT II license or mandatory license allows clients to give orders to VALR and other licensed CAT II FSPs to use its own discretion in structuring the client's portfolio. This will allow VALR to explore interesting product categories such as packaged supplies,” said Ehsani.

The Act aims to protect customers and investors and enable regulators to take enforcement action for failures to comply. South Africa has become the first African country to officially license cryptocurrency exchanges from 2021 with regulatory frameworks under development.

Related: South Africa begins licensing crypto exchange as applications pile up

As previously reported, the FSCA approved 59 license applications from cryptocurrency platforms in March 2024. At the time of Reuters' initial report, the FSCA was processing 262 licensing applications from crypto exchanges out of 355 applicants.

In January 2023, the South African Advertising Regulatory Board updated its standards to address the growing popularity of cryptocurrency investments. The rule changes aim to protect consumers from unethical advertising.

A new clause in Part III of the country's Advertising Code requires companies and individuals in South Africa to comply with certain advertising requirements regarding the offering of crypto products and services.

Advertisements including crypto giveaways must state “clearly and clearly” that investments can lose capital “because the value is volatile and can go up and down.”

Advertisements for certain services and products must be “easily understandable” to the target audience. Advertisements should provide balanced messages around the returns, features, benefits, and risks associated with the associated product or service. Social media influencers must comply with the revised rules.

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