tl;dr
South Africa has implemented the Financial Action Task Force (FATF) Travel Rule for digital assets, effective April 30, 2025, to increase transparency in the digital asset sector. The Financial Intelligence Center (FIC) Directive 9 requires Virtual Asset Service Providers (VASPs) to collect and stor...
South Africa is set to enforce the Financial Action Task Force (FATF) Travel Rule for digital assets starting April 30, 2025, significantly boosting transparency in its digital asset sector. This move follows the Financial Intelligence Center (FIC) Directive 9, which mandates Virtual Asset Service Providers (VASPs) to collect and store comprehensive originator and beneficiary details for all transactions, including full names, identification numbers, birthdates, residential addresses, transaction amounts, dates, and unique transaction IDs.
Transactions below R5,000 ($270) benefit from simplified reporting requirements, but all must be monitored and any suspicious activity reported. VASPs are required to retain this data for a minimum of five years and provide it upon request to authorities. Non-compliance could lead to substantial penalties, including fines and license revocation.
Major players in the South African crypto space, such as Binance, Luno, and VALR, have already announced compliance protocols. For example, Binance will now require detailed transaction information from users, with risks of unprocessed transactions for those who don’t comply. Luno highlighted that the Travel Rule aligns digital asset regulations more closely with traditional banking standards, akin to SWIFT practices used globally. VALR has also partnered with identity verification firm Sumsub to meet these new rules.
Some firms, like Bitcoin wallet Centbee, have been compliant for years, anticipating these regulatory changes. Yet, concerns linger among industry stakeholders, especially regarding the low $270 reporting threshold. Sean Sanders of Altify cautions that this low limit may increase compliance costs and slow transactions, potentially degrading user experience compared to platforms outside South Africa.
This regulatory update marks a significant evolution for South Africa’s digital asset landscape, seeking to harmonize it with global standards while presenting operational challenges for VASPs and investors alike.