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Cryptocurrency financial companies in South Africa will need to apply for a licence between June 1 and Nov. 20, 2023, in order to operate legally, the country's financial conduct regulator said on Thursday.

A declaration on Wednesday that crypto assets are financial products does not mean that they are legal tender, Eugene Du Toit, head of the Financial Sector Conduct Authority's Regulatory Frameworks Department, said at a press conference.

"We are not legitimising crypto assets," Du Toit said. "We are not giving credence to crypto assets."

Financial watchdogs around the world have been grappling with how to regulate the growing number of digital cryptocurrencies and tokens, the prices of which have fallen since November last year.

The FCSA deliberately referred to crypto assets rather than cryptocurrencies, as regulators do not believe the digital assets qualify as currencies, the regulator's head Unathi Kamlana said.

Declaring that crypto assets are financial products will enable authorities to clamp down on scams and protect customers, whereas they previously had no power to do so, he said.

The declaration and the further regulations to follow could help South Africa avoid being greylisted by global watchdog the Financial Action Task Force - having deficiencies in its regime against terrorism financing and money laundering - the regulators said.

South Africa's central bank governor said in August that the country was at risk of being greylisted, which IMF researchers said last year reduces capital flowing into a country by an average of 7.6% of GDP.