South Africa's efforts to combat crypto-related criminal activities

In South Africa and Kenya, a new chapter in financial services is unfolding as both countries implement stringent regulations for crypto exchanges, aiming to combat money laundering and enhance transparency.

## South Africa's Regulatory Shift

South Africa's regulatory framework for crypto assets has undergone significant changes, with crypto assets now officially classified as financial products under the Financial Advisory and Intermediary Services (FAIS) Act. This classification places them under the oversight of the Financial Sector Conduct Authority (FSCA).

As of 2023, Crypto Asset Service Providers (CASPs) began to receive licenses under the FAIS Act, requiring registration with the Financial Intelligence Centre (FIC) for Anti-Money Laundering (AML) compliance. This move positions South Africa as a model for crypto governance in Africa.

In April 2025, the "Travel Rule" was introduced, mandating CASPs to report sender and receiver information for transactions exceeding R5,000 (about $300), aligning with the Financial Action Task Force's (FATF) global crypto standards. This rule aims to enhance AML compliance and prepare South Africa for deeper international integration.

The South African Revenue Service (Sars) treats cryptocurrencies as taxable intangible assets, emphasizing the need for proper reporting and compliance.

Despite these regulations, there is ongoing regulatory uncertainty due to a recent court ruling that cryptocurrencies are not subject to exchange control regulations, a ruling that the Reserve Bank is appealing. This appeals process may lead to changes in how crypto transactions are monitored and reported.

## Action Points for Crypto Exchanges

Crypto exchanges in South Africa are urged to obtain licenses under the FAIS Act, register with the FIC for AML compliance, implement the Travel Rule, maintain AML compliance, enhance customer identification, and implement robust Know-Your-Customer (KYC) procedures.

## Kenya's Regulatory Response

Kenya, previously lax in its approach to crypto activities, is now drafting regulations for virtual asset service providers (VASPs), aiming to bring them under the regulatory purview of the Kenyan Capital Markets Association and the Central Bank of Kenya.

The Kenyan Virtual Assets Service Providers (VASP) Bill 2025 requires crypto exchanges to get licensed, open physical offices, implement anti-money laundering checks, collect user information, and share it with authorities when required.

The Financial Intelligence Centre (FIC) in Kenya has expressed concerns about transactions hiding behind anonymous accounts, wallets connected to multiple payment cards, sudden large deposits, quick bouncing between different crypto types, and funds coming from mixing services that blur transaction trails.

The FIC recommends crypto exchanges to implement strong KYC procedures and better match transactions to the identities of those initiating them.

## Notable Developments

Nedbank, a traditional South African finance institution, plans to debut smart contract applications within the next 12 months, with agriculture being the first sector targeted for smart contract implementation. The bank aims to automate imports, exports, and trade processes.

Absa CIB has already implemented blockchain for digitizing letters of credit. First National Bank is developing a system for digital title deeds using blockchain technology.

Ripple donated 25,000 RLUSD stablecoin to provide drought relief to Kenyan herders. CNGN's developers are seeking listing on Yellow Card and Roqqu. Mento Labs's Global Stablecoin Hackathon is open till May 2, and Web3bridge cohort XIII registration is open till April 15.

In a significant change from Kenya's previous approach, a South African national is currently being prosecuted for a bitcoin payment made to a terrorist organization in 2017. This prosecution underscores the importance of strict regulations in the crypto space.

Alex Witt, of Verda Ventures, discussed the firm's $40 million Minipay fund and broader strategy in a Q&A series. The explosion of crypto activity in Kenya, along with controversial launches and scams, has made regulation necessary.

In conclusion, South Africa and Kenya are embracing regulatory frameworks for crypto exchanges to combat money laundering and enhance transparency. Crypto exchanges must remain vigilant and adaptable to evolving regulatory demands, ensuring compliance while navigating potential changes in the legal landscape.

South Africa's financial authorities have reclassified crypto assets as financial products under the Financial Advisory and Intermediary Services (FAIS) Act, putting them under the supervision of the Financial Sector Conduct Authority (FSCA).
As a result, Crypto Asset Service Providers (CASPs) in South Africa must now register with the Financial Intelligence Centre (FIC) for Anti-Money Laundering (AML) compliance and obtain licenses under the FAIS Act.
In April 2025, the "Travel Rule" was implemented in South Africa, requiring CASPs to report sender and receiver information for transactions exceeding R5,000 ($300) to align with global crypto standards set by the Financial Action Task Force (FATF).
The South African Revenue Service (Sars) considers cryptocurrencies as taxable intangible assets, requiring proper reporting and compliance.
However, a recent court ruling exempts cryptocurrencies from exchange control regulations, a ruling that the Reserve Bank is currently appealing, possibly leading to changes in crypto transaction monitoring and reporting.
Kenya is now drafting regulations for virtual asset service providers (VASPs), planning to bring them under the control of the Kenyan Capital Markets Association and the Central Bank of Kenya.
Crypto exchanges in Kenya are required to get licensed, open physical offices, implement anti-money laundering checks, collect user information, and share it with authorities when necessary, as per the Kenyan Virtual Assets Service Providers (VASP) Bill 2025.