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The Financial Sector Conduct Authority (FSCA) plans to introduce strict measures to regulate cryptocurrency exchanges, advisers and brokers.
The FSCA recently published a draft declaration of crypto assets as a financial product under the Financial Advisory and Intermediation Services Act (FAIS).
What this means is that cryptocurrency exchanges, advisers, and brokers will need to become registered financial service providers (FSPs).
South African financial service providers are subject to regulation by the FAIS, which is administered by the FSCA.
Talking to CNBC Africa, Divisional Executive Investigations and Law Enforcement Brandon Topham said the planned statement will help them regulate the industry.
The world of cryptocurrencies is currently an unregulated environment that allows unscrupulous companies to take advantage of vulnerable South Africans.
There have been numerous cryptocurrency scams that have caused thousands of “investors” to lose a lot of money.
Topham said that the planned statement will help them crack down on these crypto scams in South Africa.
When the declaration of cryptoassets as a financial product comes into effect, crypto exchanges, advisers and brokers will need to register as financial service providers with the FSCA.
Unless this is done, the encryption platforms and advisers will commit a crime.
He added that cryptocurrency platforms and advisers will be forced to advise people on the risk associated with investing in cryptocurrencies.
“We want to make sure that people really understand the true impact of what they are getting into,” Topham said.
Not an investment or traditional asset class – Topham
Topham said the draft statement should not be viewed as the FSCA officially classifying cryptocurrencies as an asset class or giving it legitimacy.
In fact, Topham said, he doesn’t view cryptocurrencies as a credible investment or asset class.
“I am very skeptical of an asset class that has nothing behind it, nobody behind it, and not even an address anywhere in the world,” he said.
“People should in no way see that we are giving a seal of approval to crypto assets.”
He added that his point of view does not change the fact that many people are investing their savings in cryptocurrencies.
This is part of the reason why the Crypto Asset Regulation Working Group (CAR WG) is looking for ways to regulate aspects of the crypto environment.
Publication notice: draft declaration of crypto assets as a financial product
Declaration in support of the project to declare crypto assets as a financial product under the law on advisory services and financial intermediation
Now Read: Crypto Assets To Be Declared “Financial Products” In South Africa
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