- VALR has announced that it has received regulatory approval from the South African Financial Services Conduct Authority.
- This comes a few days after Luno, a cryptocurrency asset service provider, and Zignaly, a decentralised social investing marketplace, announced the same.
- Zignaly received a Category II- Discretionary Financial Service Provider (FSP) approval, Luno a financial service provider approval, and VALR a Category I and II approval.
This follows the FSCA's March 2024 announcement that it would approve operating licences for 59 crypto firms, following 355 applications for crypto licences received and 262 still being vetted.
According to the cryptocurrency exchange VALR, it supports up to 500,000 traders worldwide and boasts a portfolio that includes more than 1000 institutional and cooperative clients. After Pantera led a funding round in 2022, its valuation hit $240 million.
Farzam Ehsani, co-founder and CEO of VALR, described the licence as a monumental achievement for the company and praised the regulators for taking the initiative.
According to the CEO of VALR, "a CAT I licence is the standard financial service provider (FSP) licence required for a CASP in South Africa to provide advice or exchange services to its customers."
Whereas, “a CAT II licence, or discretionary mandate licence, enables customers to give VALR and other licenced CAT II FSPs a mandate to use its discretion to structure the customer’s portfolio, for example. This allows VALR to explore exciting product categories, such as bundled offerings.”
Luno PTY LTD, which now appears in the FSCA database of authorised entities, has been in the market for up to ten years and claims to be South Africa's first dedicated crypto asset service provider to obtain a financial services provider licence.
Christo de Wit, country manager for Luno South Africa, stated that the achievement benefits both the industry and South Africans. He emphasised that compliance, safety and security for its customers are its growth drivers.
He added that, while Luno prioritises those drivers, it plans to broaden its offering and introduce new features and products for financial institutions.
On safety and security, Luno announced in February 2024 that it will begin providing monthly proof-of-reserves reports to its customers to demonstrate that their funds are secure. It stated that it would pursue partnerships and approaches that would improve reporting transparency.
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However, Zignaly, now known as Merritt Administrators PTY LTD on the FSCA database, claims that the category-2 licence would allow the firm to make investment decisions on behalf of investors and possibly serve as a custodian of funds for clients.
The company compared the licence to that of Black Rock and Vanguard, saying it is a “full asset management licence.”
Zignaly added that the licence allows it to "preempt the likely extension" of regulations to decentralised finance (DeFi).
