South African regulator Financial Sector Conduct Authority (FSCA) has thrown its weight behind the decision by Binance to disable derivatives trading in the country. In an unexpected announcement last week, the leading crypto exchange stated that South African crypto traders are now disallowed from trading derivatives on its platform.
According to the FSCA, Binance arrived at such a decision after ‘due consultations’ with it. In its October 8 report, Binance suggested that its decision had been prompted by its resolve to comply with regulations.
Back in September, South Africa’s FSCA accused the crypto exchange of going ahead to offer unlicensed services to the investors within the region without recourse to relevant regulatory bodies. In its defence, Binance had claimed that the regulator lacked the jurisdiction to query its operations.
While faulting Binance’s unregulated offerings, the FCSA cited the Financial Markets Act (FMA) including the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act), noting that the exchange had fallen short of the provisions contained in the regulations.
Following this, Binance informed its users in South Africa on October 8 that they will no longer be able to open new derivatives trading accounts while advising those with existing derivatives accounts to close them within 90 days.
FSCA has also advised South Africans against investing in unregulated entities. The regulator explained:
“Once again, the FSCA cautions the public that should they consider derivative market transactions, then only do so with a properly registered Financial Services Provider.”
The FSCA added in its latest statement that South Africans should do due diligence by verifying the legal status of any service provider either by calling a toll-free number or visiting its website.
The legal status of cryptocurrencies is still being debated in South Africa with a section of proponents advising authorities to adopt a favourable stance toward cryptocurrencies while others have vehemently opposed the asset class, arguing that they have no place in the country’s economy.
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