FSCA (The Financial Sector Authority) has sent a second ‘health’ caution to South Africans regarding the country’s cryptocurrency transactions.
According to the authority, it is ‘disturbed to note’ the rising number of crypto-asset-connected losses that financial consumers experienced in the last three months.
‘The FSCA encourages the public to take extra care and be alert when handling cryptos for all financial services business,’ it stated.
Crypto assets like cryptocurrencies (a common term for them) illustrate the digital value that a central bank does not provide.
The Authority or any other South African body does not regulate investments connected to crypto, warned the FSCA.
Because of this, if there is a problem, the chances are that you will not get a refund of your money, and you will not be able to hold anyone liable.
‘Already, crypto assets are hazardous. This fraudulent act and unlicensed companies target consumers with marketing material that emphasizes the profits but not the possible disadvantages of investing in crypto.
‘This is why the FSCA endeavors to formulate regulatory steps for some elements and players in the crypto asset area.’
The FSCA stated that these steps would be present in the coming months. According to the authority, it has joined forces with other IFWG (Intergovernmental Fintech Working Group) to have a clearer picture and regulate South African crypto assets where appropriate.
‘It would be best if retirement fund trustees should also be alert where their fiduciary duties are concerned before allowing investment managers to subject their financial assets to hazard linked to crypto assets.
‘Presently, the FSCA does not approve of such retirement funds investments until the completion of regulation to protect investors.’
According to the authority, consumers who want to make investments in any investment product or asset, mainly unregulated, dangerous ones like cryptos should think twice if the deal is too good.
‘Consumers are strongly warned to prevent devastating and/or harmful financial losses,’ it stated.