Persons rendering a financial service in relation to crypto assets, must apply to the FSCA to be authorised as an FSP between 1 June 2023 and 30 November 2023.
On 19 October 2022, the FSCA declared a crypto asset as a financial product, and it had also issued a general exemption from the licensing requirement, in addition to publishing draft regulatory exemptions applicable to crypto asset FSPs for industry comment. Click here to read our previous article.
The draft regulatory exemptions have been through the consultation process and a few changes were made to the final version FSCA FAIS Notice 25 of 2023, which was published together with FSCA Communication 16 of 2023.
Licence applications
A person who as a regular feature of the business of such person renders a financial service in relation to crypto assets must apply for a licence under section 8 of the FAIS Act between 1 June 2023 and 30 November 2023. The existing general exemption from the licensing requirement referred to above, will continue to apply until the licence application has been approved or declined. If a person does not submit a licence application within the stipulated period, the exemption lapses.
The FSCA has updated the FSP licence application forms to make provision for the crypto asset product sub-category. The following FSP licence forms have been amended: Forms FSP 2, FSP 4C, FSP 4D and FSP 5.
Qualifications
Under the draft exemption, the FSCA initially proposed that crypto asset FSPs will be exempt from the qualification requirements in section 23 of the Determination of Fit and Proper Requirements. However, this position has changed with the final exemption, requiring a crypto asset FSP, their key individuals and representatives to have a qualification recognised by the FSCA to apply for a licence. The FSCA also updated the list of qualifications.
Persons that are rendering financial services in relation to crypto assets, who do not have a qualification that reflects on the updated list of recognised qualifications, and who have a qualification that they believe should reflect on the list can submit an application to the FSCA to recognise that qualification. An application for the recognition of a qualification can be included as part of the licence application.
Guarantees or professional indemnity or fidelity insurance cover
A crypto asset FSP is exempted from guarantees, or professional indemnity insurance, or fidelity insurance cover as required in section 13 of the General Code of Conduct and Board Notice 123 of 2009. However, this is only insofar as it relates to the rendering of financial services in respect of crypto assets. Where an FSP is also licensed for other financial products in addition to crypto assets, this exemption does not apply to other financial products.
Regulatory Examinations
A Crypto Asset FSP and its key individuals are granted a temporary exemption from the regulatory exams for 18 months from 11 May 2023.
Supervised representatives:
1. A crypto asset supervised representative (excluding a supervised representative in 2 below) who was never appointed as a representative of an FSP before the publication of the final exemption Notice 25 of 2023, must complete the relevant regulatory examination within two years from the date on which such a person was first appointed as a representative to render financial services in relation to crypto assets.
2. A crypto asset supervised representative who, before publication of Notice 25, only has a date of first appointment to –
(a) render financial services in respect of a Tier 2 financial product; or
(b) perform the execution of sales,
must within two years from the date on which such person was first appointed as a representative to render financial services, other than the execution of sales, in relation to crypto assets, comply with the applicable regulatory examination requirements.
Continuous Professional Development (CPD)
A Crypto Asset FSP, its key individuals and representatives, must complete a minimum of 6 hours of CPD activities relating to crypto assets per CPD cycle. This is in addition to the CPD requirements in section 33(1) of the Determination of Fit and Proper Requirements.
Supervised representatives:
1. A crypto asset supervised representative must complete a minimum of 6 hours of CPD activities relating to crypto assets per CPD cycle.
Note the start dates that apply below, whichever occurs first between:
– starting from the date on which the crypto asset supervised representative meets the applicable regulatory examination requirements and qualification requirements pertaining to crypto assets; or
– after six years from the date on which the crypto asset supervised representative was first appointed as a crypto asset supervised representative.
2. A crypto asset supervised representative who, before publication of Notice 25, only has a date of first appointment to –
(a) render financial services in respect of a Tier 2 financial product; or
(b) perform the execution of sales,
who after that date is then appointed as a representative to render financial services, other than the execution of sales, in relation to crypto assets, must complete a minimum of 6 hours of CPD activities relating to crypto assets per CPD cycle.
Note the start dates that apply below, whichever occurs first between:
– starting from the date on which the crypto asset supervised representative meets the applicable regulatory examination requirements and qualification requirements pertaining to crypto assets; or
– after six years from the date on which the crypto asset supervised representative was first appointed as a crypto asset supervised representative.
Masthead can assist you with applying for an FSP licence
We have assisted FSPs with FSP licence applications for many years and are familiar with how the FSCA operates, their licensing process and the documents they require. We will make the licensing process smoother and quicker by assisting with the application forms, compiling of the supporting documents and the submission of the application.
To find out more get in touch with us today by sending us a message or giving your closest Masthead Office a call.