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- The proposed new rules will require that anyone selling crypto assets must be authorized under the FAIS Act.
- Currently, cryptocurrency services are not regulated at all in South Africa.
- In the future, brokers and platforms will have to comply with much stricter rules.
- For more articles, go to www.BusinessInsider.co.za.
The Financial Sector Conduct Authority (FSCA) has published a new draft of rules that can improve the sale of cryptocurrencies in South Africa.
There is currently no protection for South Africans who buy cryptocurrencies, and these currencies are not regulated. The country has seen numerous cryptocurrency scams, and South Africans have lost millions.
While they do not yet regulate crypto assets, the authorities now want to regulate services related to cryptocurrencies. Under the new proposal, crypto assets will be declared as financial products under the Financial Intermediation and Advisory Services Act.
Any person who provides advice or brokering services in relation to crypto assets must be authorized under the FAIS Law as a provider of financial services and must comply with the requirements of the FAIS Law. This will include crypto asset exchanges and platforms, as well as brokers and advisers, says the FSCA.
This means that entities will have to participate in an onerous process to demonstrate their financial soundness and operational capacity, and those involved will be evaluated by the FSCA on their personal character and competence, including experience, qualifications and knowledge.
They will not be able to sell cryptocurrencies without a financial services provider license; if caught, they could be prosecuted. And intermediaries will need to justify why they recommended that their clients invest in cryptocurrencies.
“It is anticipated that the implementation of the draft Statement will result in improved disclosures to clients that more effectively highlight the high risks involved in investing in crypto assets and should also ensure that a more robust advisory process is adopted (including assessments of adequate risk) when intermediaries decide to advise clients to buy crypto assets, ”the FSCA said in a statement.
The FSCA emphasized that the new rules are not intended to “regulate, legitimize, or give credit to crypto assets,” but rather seek to mitigate “certain immediate risks” in crypto assets.
Recently, the FSCA raided Mirror Trading International, which accepts client funds in the form of Bitcoin, which are then used to trade currencies. MTI claims to have more than R2.9 billion in client funds in business accounts, but the FSCA says it has been unable to “conclusively confirm” that the funds exist. In another recent cryptocurrency scam, 2,000 investors lost 277 million rand by “investing” in VaultAge Solutions, which bought cryptocurrencies on their behalf.
FSCA Director of Investigations and Enforcement Brandon Topham recently went on to say that, in his opinion, “Anything to do with crypto is highly suspicious and no one should invest in any form of cryptocurrency or any of the accompanying products. ”.
READ | Anything to do with cryptocurrencies is highly suspicious, says SA’s financial regulator
The new rules proposed by the FSCA will be part of more “policy interventions” proposed by a working group on cryptoassets, which also includes the Reserve Bank and other parties.
Comments on the draft statement must be submitted by January 28, 2021 to the FSCA at [email protected], using the submission template available on the FSCA website at www.fsca.co .za.
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