The FSCA’s warning on crypto assets comes in the wake of the collapse of the Mirror Trading International (MTI), a bitcoin Ponzi scheme.
March 31, 2021 | AtoZ Markets – The Financial Sector Supervisory Authority of South Africa (FSCA) has once again warned of the risks of investing in cryptoassets amid the closure of the Mirror Trading International crypto pyramid.
Recall that earlier this year, the FSCA warned against the fraudulent scheme MTI, which managed to collect 23,000 BTC worth more than $700 million. In its warning, the regulator also focused on the risks of fraud and promises of very high returns, often provided by unregulated organizations.
The FSCA statement says:
“The high risk already inherent in cryptoassets is further exacerbated by fraudulent activities. Unregulated firms are reaching out to consumers with marketing materials that highlight the benefits, but not the potential drawbacks, of investing in cryptocurrency.“
The regulator said it is now “working on measures to regulate certain aspects and players in the cryptoasset industry” and urged pension fund trustees to remain “vigilant in fulfilling their fiduciary duties before allowing investment managers to expose their fund assets to the risks associated with cryptoassets.”
The FCSA also revealed the current moves by South African authorities to regulate the cryptocurrency industry. The FCSA is part of the Intergovernmental Fintech Working Group (IFWG), which released a memo last year that lists “various guidelines for regulating cryptoassets.” However, now the memorandum does not affect the legal status of cryptocurrencies in the country.
“The IFWG Memorandum does not in any way affect the status of cryptoassets in the context of other laws, such as the Financial Sector Regulation Act, currency control rules, the requirements of the Pension Funds Act and the Collective Investment Schemes Act,” the FCSA said in a statement.
However, the regulator expects that the implementation of the new measures, which are currently being worked on, will begin “in the coming months.” Recall that last fall, the South African regulator proposed a bill under which crypto assets would be treated as financial products.
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