In a recent press release the Financial Sector Conduct Authority (FSCA) notes its concern with the increasing volume of crypto assets (cryptos) related losses suffered by financial consumers in the past months and urges the public to be extremely cautious and vigilant when dealing with cryptos for any financial services business.
This follows the recent crypto health warning that highlighted the risky nature of crypto assets/products, services and scams. “Crypto-related investments are not regulated by the Authority or any other body in South Africa. As a result, if something goes wrong, you are not likely to get your money back and will have no recourse against anyone,” the FSCA emphasises.
According to the FSCA, the high risks already inherent in crypto assets is further being compounded by scam activity, as well as unregulated firms targeting consumers with marketing material that highlights the rewards, but not the potential downside, of investing in crypto. “It is for this reason that the FSCA is working at finding measures to regulate certain aspects and players in the crypto asset space. These measures will be rolled out during the coming months and we are working with other members of the Intergovernmental Fintech Working Group (IFWG) to better understand and regulate, where appropriate, crypto assets in South Africa.”
The FSCA also cautioned retirement fund trustees to remain vigilant in their fiduciary duties before mandating investment managers to expose their fund assets to risks associated with crypto assets. The FSCA currently discourages such investments by retirement funds until regulation has been finalised to safeguard investors.
Click here to read how crypto providers responded.
