The proposal uses South Africa’s Financial Advisory and Intermediary Services (FAIS) Act 2002 for its basis. The new policy classifies crypto assets as financial products. This classification brings all crypto investment, trading and advisory services under the FCA’s regulatory jurisdiction. The move is a departure from the country’s erstwhile soft touch regulatory approach to crypto.
Draft Declaration by @FSCA_ZA declares crypto assets as a financial product under FAIS Act. Not an endorsement of crypto but rather to ensure that crypto assets fall under FAIS Act as a financial services provider, including crypto asset exchanges and platforms, and advisers — maya fisher-french (@mayaonmoney) November 20, 2020
New South African Regulations Explained
Under the new rules, South Africa’s previously unregulated crypto economy is now expressly classified as part of the financial services sector. All providers must demonstrate the same fiduciary capacity as traditional financial institutions.
While bringing crypto trading and investment under the FSCA, the new regulations do not mean that cryptocurrency is recognised as money in South Africa. According to the FSCA’s supporting statement in the policy proposal, the regulations aim to stem the tide of cryptocurrency scams which have swept through the country over the past three years.
In fact, the FSCA’s director of investigations and enforcement Brandon Topham was quoted in Business Insider saying that in his opinion crypto is “highly suspect and nobody should be invested in anything form of cryptocurrency or any of the products that go with it”.
An excerpt from the document reads:
The Declaration in no way legitimises or gives credence to crypto assets, but is merely attempting to regulate intermediaries that are selling and advising customers to invest in crypto assets. It is envisaged that this will either result in customers making more informed decisions when purchasing crypto assets or potentially in a decline in intermediaries attempting to advise on and/or sell crypto assets. It will also reduce instances of fraudulent activity where players purport to be selling investments in crypto assets but are in reality absconding with customer funds.
New type of illicit outflow? Crypto Scam moves big money out of South Africa Hawks are investigating cryptocurrency CEO Willie Breedt after investors have not heard from from him since December 2019 @TreasuryRSA @GautengTreasury @SAPoliceService https://t.co/tWvqFh5LVS pic.twitter.com/NVhxTYtwX2 — news for you