Table of Contents
TL;DR,
- Among the first batch to receive South Africa’s crypto license include Luno, South Africa’s top crypto exchange, and Zignaly, a decentralized social investing platform.
- Zignaly obtained a Category 2 discretionary FSP license listed on the FSCA registry under Merritt Administrators PTY LTD.
- Since June 2023, the FSCA has been accepting licensing applications, attracting over 230 crypto firms.
South Africa’s regulatory space takes new heights with the Financial Sector Conduct Authority (FSCA) awarding the first wave of approvals. Luno and Zignaly are among the first recipients of the FSCA crypto license, suffering clearer guidelines for companies and stronger protection for consumers.
In plain terms, Luno is authorized as a financial services provider under the FAIS Act, and Zignaly—listed as Merritt Administrators (Pty) Ltd—has secured a Category II mandate, allowing discretionary portfolio management.
Luno and Zignaly Among First Batch to Acquire FSCA Crypto License
Since June 2023, the FSCA has been accepting licensing applications, attracting over 60 crypto firms. This followed the passage of legislation designed to bring cryptocurrency under-regulated financial activities. The FSCA has emphasized the importance and warned of hefty fines for companies without approvals.
Christo de Wit, Luno’s country manager for South Africa, expressed enthusiasm about this regulatory milestone:
“This is a positive step for both the cryptocurrency industry and South Africans. Compliance, safety, and security for our customers have driven our growth since the beginning. They will continue to be priorities as we expand our offering to introduce more features and products for financial institutions.”
Luno is now on the FSCA’s official registry of authorized entities, confirming as a compliant operator in the South African market. The platform can legally operate and expand its offerings throughout the market. It’s a straightforward approach, more like the green light to operate in South Africa.
RELATED: Kotani Pay Becomes South Africa’s First Licensed On/Off-Ramp Fintech
Meanwhile, Zignaly obtained a Category 2 discretionary FSP license listed on the FSCA registry under Merritt Administrators PTY LTD. This particular FSCA crypto license operates under similar guidelines to tradition discretionary managers. In a nutshell, the platforms can make decisions on a client’s behalf, acting more like a custodian.
Photo: Zignaly
The Category II authorizations are often described as a “full asset management” having similarities with licenses held by entities like BlackRock and Vanguard. Institutions have shifted their mentality, acknowledging crypto as a legitimate asset with potentially high yields. For South Africa, the discretionary FSP license is a likely “preemptive chess move” foreshadowing the expansion of the region’s DeFi sector.
Additionally, the company previously acquired $50 million in funding from a Luxembourg fund, investor confidence, coupled with a regulatory greenlight.
How Licensed Crypto Exchanges Are Changing the Investment Landscape
The rise of licensed crypto exchanges in South Africa opens up new investment opportunities for both individuals and businesses. Compared to unregulated platforms, these regulated ones offer better security, transparency, and accountability.
This could draw in investors who were hesitant to enter the crypto market before because they were worried about regulations.
Photo: Chainalysis
Licensing crypto makes it more official for traditional banks and other financial institutions, which makes it easier for them to work together and combine their services. The playing field just doubled with banks and investment firms having access to licensed crypto exchanges.
The potential for hybrid financial products is possible. Crypto ETFs are now a potential avenue, with the FSCA rules dictating what businesses can not do. Ideally, the regulators also encourage licensed crypto exchanges to find ways to balance between following these rules and being creative.
RELATED: South African Crypto Regulation Advances While Tax Mechanics Remain Abstract
How to vet platforms now that approvals are rolling out
As approvals expand, expect a mix of well‑established brands and new entrants. Use this checklist before you deposit a cent:
Confirm authorization status
- Search the FSCA register for the legal entity name (e.g., “Luno (Pty) Ltd,” “Merritt Administrators (Pty) Ltd”).
- Prefer platforms that are explicitly recognized as or integrated with licensed crypto exchanges.
Examine product category and mandate
- Are you self‑directing trades on an exchange, or granting a discretionary mandate?
- If discretionary, what guardrails are in the mandate (drawdowns, asset limits, stablecoin use, rebalancing frequency)?
Scrutinize custody and segregation
- Who holds assets? Is there third‑party custody? How are hot/cold storage and keys managed?
- Are client assets ring‑fenced from company operating funds?
Inspect transparency practices
- Is there proof‑of‑reserves or another verifiable solvency signal?
- Does reporting include execution quality, slippage, and fee breakdowns?
Evaluate operational resilience
- Downtime history, incident response, and insurance coverage details.
As more licensed crypto exchanges join the registry, competitive pressure should improve fee clarity, on‑/off‑ramp speed, and risk disclosures. Over time, that makes it easier for you to compare apples to apples.
