🟠 South Africa’s message to the rest of Africa

Plus: 🇿🇦 South Africa grants 63 new crypto licenses 🏛️ FSCA chief outlines principles-based regulation 🇳🇬 CBN official testifies against Binance 🛠️ Fuse Network launches $10K summer hackathon

🟠 South Africa’s message to the rest of Africa
Hi there

Oluwaseun here, the lead editor here at Mariblock.

Welcome to Mariblock Weekly, where we bring you the most important developments in the African blockchain scene over the past week.

I think we can safely call this edition of MB Weekly the South African edition. Quite frankly, no other country on the continent produces high signal blockchain and crypto headlines as much as South Africa.

Well, there’s the continuation of the Nigeria vs. Binance legal battle, which continues to see Binance staffer Tigran Gambarya lock up.

In a way, the two stories are similar in that they’re becoming a case study of how and how not to regulate a nascent market. For South Africa, a progressive regulatory stance is attracting builders and investments. In Nigeria, builders are fleeing, and so are the investments that builders attract.

Let’s get to it!

Stay up-to-date with the latest blockchain developments in Africa

Topline: The Financial Sector Conduct Authority (FSCA) of South Africa has significantly expanded its roster of licensed crypto asset service providers (CASPs), approving 63 new applications in the second quarter of 2024. (Details)

The details: As of June 30, 2024, the total number of licensed CASPs in South Africa was 138, up from 75 in April 2024, FSCA said in a July 2 press release.

  • The FSCA has received a total of 383 CASP license applications since the process began on June 1, 2023.
  • The regulator has declined five applications, while 80 applicants voluntarily withdrew following discussions with the FSCA about the appropriateness of their business models.
  • The remaining applications are still under consideration by the regulator.
  • We published the full list of the news licenses on LinkedIn. Check it out here.

🫧 Oluwaseun’s thought bubble: As I wrote on LinkedIn, the most notable part of the new licenses for me is that Kotani Pay — originally founded in Kenya by Kenyans — is now licensed in South Africa.

  • Kenya currently has no crypto regulatory framework, despite positive developments from last year including legislators asking the Blockchain Association of Kenya to draft a bill.
  • In one of the Mariblock Weekly newsletters from last year, I wrote that “clear, supportive regulation will determine Africa’s crypto hub.”
  • South Africa, while not yet there, is certainly on the right track. So it's no surprise seeing Kotani Pay effectively shifting base to South Africa.

Switching gears: The FSCA isn’t just expanding the number of licensed CASPs; it’s also ramping up enforcement of its regulations.

From rigid rules to flexible principles: South Africa's approach to financial innovation

Image credit: FSCA

Topline:​ The Financial Sector Conduct Authority’s (FSCA) commissioner, Unathi Kamlana, delivered a wide-ranging public lecture at North-West University on June 26, 2024, addressing South Africa’s approach to striking a balance between fostering innovation in the financial sector and maintaining effective regulatory oversight. (Details)

Telling quote: “The future demands that as regulators we should be both proactive and adaptive, continuously evolving our approaches to keep pace with technological advancements,” Kamlana said. “This will involve embracing new regulatory frameworks, leveraging advanced technologies for oversight, and maintaining a flexible mindset to accommodate the rapid changes in the sector.”

The details: In a move to match words with action, Kamlana said the FSCA is shifting towards a principles-based regulatory approach.

  • This approach focuses on ensuring fair treatment of customers rather than prescribing detailed rules.
  • According to an academic journal, Principles-based regulation involves three key elements:
  • Broad-based standards that prefer high-level, broadly stated rules over detailed ones.
  • Outcomes-based regulation that focuses on achieving desired results for consumers and the financial system.
  • Increasing senior management responsibility to hold top executives accountable for regulatory compliance.

Of note: The FSCA’s regulation places significant oversight responsibilities on “key individuals,” which include top executives.

  • In a recent regulatory action publication, the FSCA re-emphasized its seriousness about holding key individuals accountable.
  • Earlier in 2024, an FSCA official confirmed that some withdrawn crypto license applications were related to the lack of key individuals.

Assets: Mbe4design & Latino Life | Design by Ifeoluwa Awowoye

Topline: A Central Bank of Nigeria (CBN) official has testified that Nigerian users of Binance conduct transactions using pseudonyms, potentially complicating the ongoing legal case against the cryptocurrency exchange. (Details)

The details: Olubukola Akinwumi, deputy director at the CBN, testified before the Federal High Court in Abuja on July 5, 2024.

  • Akinwumi stated that Binance users in Nigeria often use pseudonyms to hide their identities when trading.
  • The testimony is part of the ongoing trial against Binance and its executive, Tigran Gambaryan, facing money laundering charges involving $35.4 million.
  • Akinwumi emphasized that Binance does not have a license to operate in Nigeria and that its services related to naira deposits and withdrawals are regulated activities typically carried out by CBN-registered institutions.

🫧 Oluwaseun’s thought bubble: The stark contrast between Nigeria and South Africa’s approaches to crypto regulation is becoming increasingly significant, with the effects growing more apparent by the day.

  • South Africa’s progressive stance is attracting innovation and investment, while Nigeria’s more restrictive approach appears to be pushing talent and opportunities away.
  • Some of the most gifted builders I know have shifted their focus away from Nigeria. There’s a growing sentiment to “build for the world” rather than focusing on Nigeria or even Africa specifically.
  • On the surface, that’s not particularly a bad thing. However, when you contextualize that these builders are mostly mission-driven, you begin to realize how it’s a loss. Also, it means these founders take the investments they attract elsewhere.

Catch up

man in white shirt holding us a flag
Photo by Glen Rushton / Unsplash

🇳🇬 Crypto exchange KuCoin imposes 7.5% VAT on transaction fees for Nigerian users (Mariblock)

🇿🇦 South Africa announces 30 investigations into crypto activities (Mariblock)

🇳🇬 Binance vs Nigeria: A timeline of events as they unfold (Mariblock)

🇰🇪 Worldcoin to resume operations as Kenyan police drop investigations (Mariblock)

🇳🇬 Nigeria to launch AI and Blockchain research hub nationwide (Mariblock)

🇳🇬 Nigeria's SEC announces regulatory sandbox for crypto firms (Mariblock)


Fuse Network is hosting its summer 2024 hackathon from July 15th to August 4th, with a $10,000 prize pool. (Details )

That’s it for this week.

See you next week.




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