Crypto exchange VALR has confirmed that it has acquired the necessary approval from the South African Financial Services Conduct Authority (FSCA) to operate within the regulatory framework. This development occurred shortly after two other entities in the digital asset space—Luno, a crypto asset service provider, and Zignaly, a platform enabling decentralized social investments—similarly publicized their own regulatory endorsements.
Specifically, Zignaly has been granted a Category II – Discretionary Financial Service Provider (FSP) approval, allowing it to provide certain regulated services. Meanwhile, Luno secured a financial service provider approval, signaling its compliance with local financial regulatory standards. VALR’s authorization encompasses both Category I and II approvals, indicating a broader scope of permissible activities.
This sequence of regulatory clearances is part of the wider directive issued by the FSCA in March 2024, in which the authority divulged its plans to issue operational licenses to 59 cryptocurrency firms. The FSCA’s announcement came in the context of evaluating 355 applications from crypto entities seeking the green light to operate under its jurisdiction; at the time of the announcement, 262 applications were still under review.
The FSCA’s proactive stance reflects a growing recognition of the significance of cryptocurrencies and the necessity for robust regulatory frameworks to govern the burgeoning industry. This effort is aimed at ensuring that the sector operates transparently, securely, and in alignment with the financial safeguards expected by South African authorities.
VALR, a prominent cryptocurrency exchange, has announced its achievement of reaching support for an impressive 500,000 traders globally, alongside managing a substantial portfolio of over 1000 institutional and cooperative clients. The exchange’s market valuation soared to an impressive $240 million subsequent to a successful funding round in 2022 that was spearheaded by investment firm Pantera.
Farzam Ehsani, the co-founder and CEO of VALR, has heralded the granting of the regulatory license as a historic milestone for the company. He has also commended the South African regulators for embracing a proactive approach to oversight in the cryptocurrency space.
Ehsani clarified that the Category I license acts as the standard for crypto asset service providers (CASPs) in South Africa, authorizing VALR to provide advisory and exchange services to its clientele. On the other hand, the Category II license empowers VALR with a discretionary mandate, allowing it to construct and manage client portfolios according to its discretion, which unlocks the potential for VALR to delve into innovative product spaces, such as bundled offerings that might appeal to a diverse customer base.
Similarly, Luno PTY LTD has established itself as a stalwart in the crypto service sector. Celebrating a decade in the market, Luno has claimed the title of being the inaugural crypto asset service provider in South Africa to gain a financial services provider license from the FSCA. This acknowledgment is listed on the FSCA database of authorized entities.
Christo de Wit, the country manager for Luno South Africa, expressed that this accomplishment is a boon not just for the company but also for the South African populace. He highlighted that adherence to compliance and the assurance of safety and security for its customers are the cornerstones of Luno’s expansion strategy. De Wit indicated that while these elements are prioritized, Luno also intends to diversify its services by launching novel features and financial products.
With an unwavering commitment to trust and security, Luno announced in February 2024 its initiative to begin issuing monthly proof-of-reserves reports to its customers, reinforcing the message that their funds are well-protected. This move is part of Luno’s broader strategy to enhance transparency through reporting rigor, and it also aims to forge partnerships that further this commitment to transparency for both the company and its customers.
Zignaly, whose operation in South Africa is officially registered as Merritt Administrators PTY LTD in the Financial Services Conduct Authority (FSCA) database, has made a significant announcement regarding the scope and potential of their Category II license. According to the firm, this license authorizes them to make investment decisions on behalf of their investors, venturing into the realm of discretionary asset management.
Further expanding on the advantages of their Category II license, Zignaly equates its regulatory status to that of renowned investment management firms like Black Rock and Vanguard. The company articulates that this license is tantamount to a “full asset management licence,” which intimates that they have the authority and trust to operate with significant autonomy in the management of client assets, which may also include taking on the role of a custodian for clients’ funds.
Zignaly has emphasized an additional strategic benefit of this licensing: it potentially positions the firm to navigate and adapt to any upcoming regulatory developments within the realm of decentralized finance (DeFi). By attaining this license, Zignaly believes it is staying ahead of the curve, anticipating and preempting any future expansions of financial regulations that could encompass DeFi, thereby securing its ability to operate within a potentially stricter regulatory environment. This proactive stance underscores Zignaly’s commitment to compliance and readiness for the evolving landscape of digital finance.
