Crypto assets as a financial product

The FSCA declared crypto assets a financial product under the financial advisory law. That means advice or intermediary services about them require authorisation. This gives you a register to check, but it does not make the asset's price safe. This page explains the difference.

The declaration and its effect

The FSCA declared crypto assets a financial product under the Financial Advisory and Intermediary Services Act. The Act covers advice and intermediary services about financial products. Once crypto assets became a financial product, anyone giving advice or intermediary services about them needed to be licensed as a financial services provider.

The declaration does not make crypto assets safe. It does not change their price behaviour, their volatility, or the risk of losing money. It changes who may legally sell or advise on them. You can still lose everything you put in.

Regulating the service provider, not the price

The FSCA regulates the service provider. It sets rules for how licensed providers must behave: they must be fit and proper, they must disclose conflicts, and they must act in the client's interest. The FSCA does not regulate the price of crypto. No regulator does.

The price of crypto is set by markets, not by the FSCA. A licensed provider can sell you a product that falls to zero. The licence is not a guarantee of performance. It is a guarantee that the provider has met the FSCA's requirements to operate.

What authorisation means for a provider

A provider authorised for crypto assets has an FSP licence with a category that covers crypto. The licence allows the provider to give advice or intermediary services. It does not allow the provider to do anything outside its categories. If a provider holds your crypto, it may need a different category or a separate custody arrangement.

The provider must comply with the general duties in the Act: disclose fees, avoid conflicts, and act with care. If the provider does not, you can complain to the FAIS Ombud. But the Ombud cannot recover money from a failed investment.

What the register can and cannot tell you

The FSCA register tells you whether a provider is licensed and what categories it holds. It tells you the status of the licence: active, suspended, or withdrawn. It does not tell you whether the provider is honest, whether its fees are fair, or whether its custody is secure.

The register is a snapshot. A provider can be licensed one day and suspended the next. Check the register on the day you deal with the provider. And remember: a licence is a legal permission, not a quality mark.

The limits of protection

A licence does not protect you from market losses. If the price of crypto falls, you lose money. A licence does not protect you from fraud. A licensed provider can still defraud you; the licence means the FSCA can take action, but it cannot always get your money back.

The FSCA's role is to supervise providers, not to guarantee outcomes. The compensation schemes that exist for some financial products do not cover crypto. If a provider fails, you may be an unsecured creditor.

What to ask a provider

Ask for the provider's FSP number and check it on the FSCA register. Ask what category the provider holds for crypto. Ask how your crypto will be held: in your name, in the provider's name, or in a separate custody account. Ask what happens if the provider fails.

Ask about fees, withdrawal terms, and the risks of the specific crypto asset. A provider that cannot answer these questions clearly is not one you should trust with your money, licensed or not.

The declaration does not create a state guarantee

When the FSCA declared crypto assets a financial product, it brought the providers of those assets under the Financial Advisory and Intermediary Services Act. That does not mean the state now stands behind the value of a bitcoin or any other token. The declaration is about who may sell, advise on, or manage crypto for South African clients, and how they must behave while doing so. It does not turn a speculative token into a protected deposit.

A reader who loses money because the market falls has no claim against the FSCA. The authority's role is to supervise the conduct of the financial services provider, not to underwrite the asset. If a licensed provider follows the rules and the client still loses, the loss sits with the client. The declaration changes the regulatory perimeter, not the risk profile of the underlying asset.

The practical consequence is that a licence certificate on a wall or a website is not a promise that the investment will hold its value. It is a statement that the firm has met the FSCA's fit and proper requirements for the category of service it offers. The reader must still decide whether the asset itself is something they can afford to hold through a drawdown.

The declaration reaches further than the FSP register

A crypto asset service provider that was already an authorised financial services provider had to add the crypto-asset category to its licence. A firm that never needed an FSP licence before now needs one if it provides those services to the public. The declaration does not only affect the firms already on the register; it pulls in firms that previously sat outside the perimeter.

That means a reader cannot assume that a firm with a long history in traditional financial advice is automatically licensed for crypto. The FSCA's register shows the categories of financial services a firm is authorised to provide. If the crypto-asset category is not listed, the firm is not licensed for that activity, even if it is licensed for something else.

The reverse is also true. A new firm with no history may appear on the register with a crypto-asset licence and nothing else. The register is the source for the current categories, not the firm's marketing. A reader who checks the firm's FSP number but not the categories has checked only half the record.

The declaration does not stop unlicensed providers from advertising

The FSCA can act against a firm that provides financial services without a licence, but it cannot prevent every unlicensed pitch before it appears. Social media, messaging apps, and word of mouth carry offers from firms that have never applied for a licence. The declaration makes those offers unlawful, but it does not make them disappear.

A reader who sees an advertisement for crypto investment services should not assume the FSCA has vetted the advertiser. The authority does not pre-approve advertising. It acts after a complaint or through its own monitoring, and enforcement takes time. In the gap between the pitch and the enforcement, the reader is the one who decides whether to hand over money.

The practical check is to look for the FSP number in the advertisement itself. A legitimate provider must disclose its FSP number when rendering financial services. If the advertisement has no FSP number, or the number does not resolve to a crypto-asset category on the register, the reader has already found a reason to pause.

A written mandate is where the declaration meets discretionary management

When a provider trades crypto on behalf of a client, the law sees that as discretionary financial services. The client gives the provider a written mandate to make investment decisions without checking each trade first. The declaration brought that activity under the same regime as discretionary management of shares or unit trusts.

The mandate is the document that defines the boundary of the provider's authority. Without a written mandate, the provider has no lawful basis to trade on the client's behalf. A provider that trades without a mandate is not merely unlicensed; it is acting outside the relationship the law recognises. The client has no way to hold the provider to the standard of care that a licensed discretionary manager must meet.

A reader who is asked to hand over login details for an exchange account, or to deposit funds into a pool that the provider will trade, is being asked to enter a discretionary arrangement. The first question is not about expected returns. It is about the written mandate and the licence category that permits the provider to act under one.

The declaration does not apply to every crypto activity

Buying and holding crypto for personal use is not a financial service. The declaration does not require a private individual to hold a licence to buy bitcoin from an exchange and move it to a wallet. The line is crossed when a person provides a financial service in relation to crypto assets to another person, for example by giving advice or managing a portfolio.

That distinction is often lost in the noise. A reader who mines crypto, or who buys and sells for their own account, is not providing a financial service. A reader who charges others for advice on which tokens to buy, or who pools money from friends to trade, may be providing a financial service without realising it. The declaration does not care whether the provider calls themselves a professional; it cares what they do.

The practical consequence is that a reader cannot assume that a licence is needed only by large firms. A small operation with a Telegram channel and a few clients can be just as much in scope as a corporate. The FSCA's register is not a list of the only firms that should be licensed; it is a list of the firms that have obtained a licence. Many others should have one and do not.

The declaration changes the questions a client should ask

Before the declaration, a reader might have asked whether a crypto platform was registered with a foreign regulator, or whether it had a good reputation online. Those questions still matter, but they are no longer the first questions. The first question is now whether the provider holds an FSP licence with a crypto-asset category from the FSCA.

That question leads to the next one: what does the licence category allow? A firm licensed for advice may tell a client which token to buy, but it may not execute the trade on the client's behalf unless it also has an intermediary services category. A firm licensed for intermediary services may execute trades, but it may not decide which trades to make unless it has a discretionary category. The categories are not interchangeable.

A reader who does not ask these questions may end up with a firm that is licensed for one thing but doing another. The declaration gives the reader a way to check the firm's own claims against a public record. That check is not a guarantee of safety, but it is a way to see whether the firm's own description of its licence matches what the FSCA actually granted.

What the declaration does not change about your crypto

The declaration brings crypto asset service providers under the FSCA's conduct rules, but it does not alter the nature of the asset itself. A bitcoin is still not legal tender, and no part of the declaration makes a token less volatile or a loss recoverable. The asset's price can still fall to zero, and a licensed provider can still offer it. The declaration changes who may offer services, not what the asset can do to a portfolio.

A common misreading is that the declaration creates a compensation scheme like the one that covers bank deposits or certain insurance products. It does not. If a licensed crypto provider fails, there is no statutory guarantee that a client will get money back. The FSCA's powers include enforcement against misconduct, but they do not include underwriting a failed trade. The reader still carries the market risk and the counterparty risk.

The declaration also does not backdate any protection. Services offered before the declaration date were not regulated as financial products, and no new rule changes what happened then. A reader who lost money to an unlicensed provider before the declaration cannot use the declaration to claim a refund. The declaration is forward-looking: it sets the rules for offers made after it came into effect, not for past conduct.