South African FSP Crypto-Asset License: Application Process, Requirements, and M&A Opportunities

South Africa as a Regulated Hub for Crypto-Asset Service Providers

South Africa has emerged as one of the most advanced and pragmatic jurisdictions for regulating crypto-asset service providers (VASPs). Since the Financial Sector Conduct Authority (FSCA) formally classified crypto assets as financial products, firms offering crypto-related services are now required to operate under a Financial Services Provider (FSP) license with crypto-asset permissions.

For exchanges, brokers, OTC desks, custodians, wallet providers, and fintech groups seeking regulatory legitimacy, banking access, and international credibility, a South African FSP with crypto-asset authorization has become a strategic licensing option.

Zitadelle AG advises clients on new FSP crypto-asset license applications, as well as acquisitions of already-licensed South African VASPs, including full post-transaction operational support.

What Is a South African FSP Crypto-Asset License?

A South African Financial Services Provider (FSP) license is issued by the Financial Sector Conduct Authority (FSCA). Since 2023, crypto-asset services fall within the FSCA regulatory perimeter.

Under the FSP framework, crypto businesses may legally provide services such as:

• Crypto-asset exchange and brokerage

• Crypto-to-fiat and crypto-to-crypto trading

• OTC dealing and liquidity provision

• Custody and safekeeping of crypto assets

• Execution of crypto-asset transactions on behalf of clients

To operate legally, a firm must:

1. Hold an FSP license, and

2. Have crypto-asset activities explicitly approved under its license conditions.

Crypto-Asset Activities Regulated by the FSCA

The FSCA regulates crypto activities under the FAIS Act, including:

• Intermediation in crypto assets

• Advice related to crypto-asset investments

• Execution and facilitation of crypto transactions

• Custody or administration of crypto assets

Any entity offering these services to South African residents — or operating from South Africa — must be licensed or exempted.

South African FSP Crypto-Asset License: Application Procedure

Step 1: Corporate Structuring

• Incorporation of a South African private company (Pty) Ltd

• Appointment of directors (local presence recommended)

• Determination of regulated crypto activities

Step 2: Key Individual Appointment

The FSCA requires at least one Key Individual (KI) who:

• Has demonstrable experience in financial services or crypto-assets

• Meets Fit and Proper requirements

• Is responsible for compliance and oversight

Zitadelle AG can provide or arrange experienced Key Individuals as part of the licensing or post-acquisition structure.

Step 3: Compliance Framework & Policies

Mandatory documentation includes:

• AML/CFT policy aligned with FIC Act and FATF standards

• Risk Management and Compliance Programme (RMCP)

• Client onboarding and KYC procedures

• Conflicts of interest and complaints handling policies

• Cybersecurity and operational risk policies

Step 4: FSCA License Submission

• Online submission via FSCA portal

• Disclosure of shareholders and controllers

• Financial projections and business model explanation

Step 5: Regulatory Review

• Typical review period: 4–8 months

• FSCA may request clarifications or amendments

• Upon approval, crypto-asset permissions are endorsed on the FSP license

Key Requirements for a Crypto-Asset FSP in South Africa

Capital & Substance

• No fixed minimum capital, but adequate financial resources required

• Operational office or registered address in South Africa

• Accounting and audit arrangements

Governance

• Directors and KI must pass Fit and Proper tests

• Clear segregation of duties

• Independent compliance oversight (internal or outsourced)

AML / CFT Obligations

Crypto FSPs are accountable institutions under the Financial Intelligence Centre Act (FICA) and must:

• Register with the FIC

• Implement Travel Rule-aligned transaction monitoring

• Maintain suspicious transaction reporting procedures

Zitadelle AG provides outsourced AML, compliance, and audit services tailored to FSCA expectations.

Examples of Crypto Companies Operating in South Africa with FSP Licenses

Several well-known crypto firms operate in South Africa under FSP registrations with crypto-asset permissions, including:

• Luno (Pty) Ltd

• VALR (Pty) Ltd

• Ovex

• AltCoinTrader

These firms operate under FSCA oversight, maintain local compliance teams, and enjoy improved banking relationships due to their licensed status.

Difference Between Category I, Category II FSPs and the ODP License in South Africa

Under South Africa’s regulatory framework, crypto-asset service providers may operate under different authorisation types depending on the nature of services provided.

A Category I Financial Services Provider (Cat I FSP) is authorised to provide advice and/or intermediary services in relation to crypto assets. This category is typically suitable for crypto brokers, exchanges, OTC desks, and platforms that facilitate crypto transactions on behalf of clients without managing client funds on a discretionary basis. Most crypto-asset service providers operating in South Africa fall under Category I, as it allows execution, facilitation, and brokerage activities while maintaining lower regulatory complexity.

A Category II Financial Services Provider (Cat II FSP), also known as a Discretionary Financial Services Provider, is authorised to manage client assets on a discretionary basis. In a crypto-asset context, this applies to firms offering discretionary portfolio management, managed crypto strategies, or algorithmic trading where investment decisions are made without prior client instruction. Cat II licenses involve higher regulatory scrutiny, enhanced capital adequacy expectations, and stricter governance requirements, making them suitable primarily for asset managers rather than exchanges.

Separately, the OTC Derivatives Provider (ODP) license is a distinct regulatory authorisation required for firms offering crypto derivatives, such as contracts for difference (CFDs), futures, or options referencing crypto assets. An ODP license is mandatory where crypto products qualify as derivatives under South African law. Unlike a standard FSP crypto-asset authorisation, the ODP framework imposes significantly higher capital requirements, reporting obligations, and risk management standards, and is typically relevant for leveraged trading platforms rather than spot crypto businesses.

In practice, spot crypto exchanges and brokers operate under Cat I FSP crypto-asset permissions, discretionary crypto managers under Cat II, and crypto CFD or derivatives platforms under the ODP regime. Selecting the correct licence category is critical, as misclassification may result in regulatory enforcement or licence withdrawal.

Zitadelle AG advises clients on licence scoping, category selection, and restructuring, including upgrading from Cat I to Cat II, or assessing whether an ODP authorisation is required for specific crypto products.

Acquiring an Existing South African FSP Crypto License (M&A Route)

Why Acquisition Is Often Faster

Instead of applying from scratch, many international clients opt to acquire an already-licensed FSP with crypto-asset permissions, allowing:

• Immediate market entry

• Existing regulatory track record

• Faster banking and counterpart onboarding

Zitadelle AG has successfully procured and arranged acquisitions of more than seven (7) South African FSP and crypto-asset licensed entities for international clients.

Zitadelle AG’s M&A Services for South African Crypto FSPs

Our M&A support includes:

License Sourcing & Due Diligence

• Identification of suitable FSP / crypto-asset firms

• Regulatory, legal, and compliance due diligence

• FSCA risk assessment

Escrow & Transaction Structuring

• Independent escrow arrangements

• Conditional closing aligned with FSCA approvals

• Share transfer and control change filings

FSCA Change of Control Support

• Preparation of regulator notifications

• Ongoing liaison with the FSCA

• Post-transaction compliance alignment

Post-Acquisition & Ongoing Operational Services

Zitadelle AG provides full post-acquisition operational continuity, including:

• Key Individual (KI) provision or replacement

• Director appointment services

• Accounting and audit coordination

• Physical office and substance setup

• Ongoing AML/CFT compliance and reporting

• Regulatory updates and FSCA correspondence handling

This allows clients to acquire a licensed entity and operate compliantly from day one, without the typical regulatory friction.

Frequently Asked Questions (FAQ)

How long does a new FSP crypto-asset license take?

Typically 4–8 months, depending on FSCA workload and application quality.

Can foreign shareholders own 100% of a South African crypto FSP?

Yes. There are no foreign ownership restrictions.

Is local staff mandatory?

A local Key Individual or compliance presence is strongly recommended.

Is South Africa suitable for international crypto operations?

Yes. Many firms use South Africa as a regulated base for Africa-focused or global operations.

Is acquisition faster than a new application?

In most cases, yes — subject to FSCA approval of ownership changes.

Why Work with Zitadelle AG?

Zitadelle AG is a regulatory and transaction advisory firm specializing in:

• Crypto-asset and fintech licensing

• FSCA-regulated FSP structures

• Cross-border M&A of regulated entities

• Compliance, AML, and governance outsourcing

With a proven track record in South African crypto licensing and acquisitions, we provide end-to-end execution, not just advisory opinions.

Get Professional Assistance with Your South African Crypto FSP

Whether you are:

• Applying for a new South African crypto-asset FSP license, or

• Seeking to acquire an already-licensed crypto firm,

Zitadelle AG can structure, execute, and support the entire process — from licensing and escrow to long-term compliance.

📩 Contact Zitadelle AG to discuss your South African crypto licensing or acquisition strategy.