Crypto assets are now treated as financial products under South Africa’s Financial Advisory and Intermediary Services (FAIS) Act according to a new notice published in the gazette.

Declaration of the crypto assets as financial products means crypto asset service providers (CASP), such as exchanges, must apply for a license.

READ MORE: Africa’s Cryptocurrency Market Grow By 1200% Despite Bear Market

The declaration became effect on October 17 less than six months after the South African government officially declared that the central bank would allow the South African Reserve Bank to regulate crypto assets.

“The reason for the declaration was cited as being due to the ‘mounting risk in the crypto asset environment’ but it also looks [like] this action was done to comply with a Financial Action Task Force (FATF) deadline for remediation of recommendations for South Africa,” said  Farzam Ehsani, the founder and CEO of South African crypto exchange platform Valr.

READ MORE: Ruto Plans To Shift Boda Boda Riders From Gambling To Trading On NSE

“Recommendations not fully remediated or significantly progressed by October 2022 can lead South Africa to be placed on the FATF grey list, which could have materially negative consequences for the country as a whole.”

In the brief notice, the Financial Sector Conduct Authority (FSCA) said a crypto asset, which it referred to as “a digital representation of value”, must be regulated in South Africa from the date of publication.

Regulations that the authorities have said they planned to introduce include applying foreign exchange controls and licensing crypto trading companies.

READ MORE: Start Early! 5 Financial Literacy Games For Kids That Will Make Them Understand Money

South Africa’s move comes almost eight months after Kenya’s Central Bank warned Kenyans to avoid to peer-to-peer (P2P) cryptocurrency transactions since it is not regulated.

Despite the anti-crypto stance by the regulator, Kenya leads Africa in crypto adoption and is ranked fifth in the world ahead of some of the developed countries like the US, China and South Africa, according to the Chainalysis.