Financial Sector Conduct Authority in South Africa To Provide Regulatory Clarity in 2022

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In Brief
  • The commissioner of the Financial Sector Conduct Authority in South Africa Commissioner says new cryptocurrency regulations will be released in 2022.

  • The commissioner encourages citizens to pay more attention to the development of a CDBC by the South African Reserve Bank.

  • Cryptocurrencies are viewed as assets, rather than currencies in South Africa.

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South Africans can expect more clarity surrounding how to trade major cryptocurrencies in 2022, as FSCA seeks to protect retail investors from scams.

In the light of two infamous cryptocurrency scams that have their roots in South Africa and the increasing interest in cryptocurrency, the Financial Sector Conduct Authority, the prudential authority, and the financial surveillance body will table new regulations in early 2022 to protect retail investors. The rules will include guidelines on trading XRP, Litecoin, and Ethereum. The FSCA sees cryptocurrencies as digital assets, not currencies.

Unathi Kamlana, the FSCA commissioner, said that the best advice he can give to retail investors would be to closely follow the unfolding of plans by the South African Reserve Bank to create its own Central Bank Digital Currency. In the meantime, due to the FSCA taking the view of an asset rather than a currency, Kamlana does not see it as a direct threat to financial stability in the country.

South Africans dabbling in crypto

According to data released by the global cryptocurrency exchange Luno, 15% of South Africans hold crypto, while a survey conducted by the Financial Mail pegs that number at around 25%. The amounts invested by these South Africans lie between ZAR 100 (~USD6) and ZAR 1000(~USD62), implying dabbling more than a serious investment.  Forty-four percent of respondents to the survey have concerns around aspects of crypto that they don’t understand.

Two infamous South African scams that rocked Crypto World

The Africrypt scam saw $3.6B stolen in an alleged hack from a company run by Raees and Ameer Cajee. The brothers were offering a 10% per month return on crypto investments. South Africa’s Hanekom Attorneys, who were investigating the hack on behalf of clients believe that the Cajee brothers were part of a larger syndicate. Two mysterious individuals have since offered to resurrect the company and return a percentage of the lost funds to investors.

The Mirror Trading International company was accused of running a Ponzi scheme and offering unrealistic returns on bitcoin investments. The transaction database was hacked by a group called Anonymous ZA, which drew attention to suspicious activities. The FSCA subsequently raided the MTI offices, and the homes of two shareholders in October 2020, while the CEO disappeared in Dec. 2020.

The final order for the liquidation of company assets was handed down in June 2021, and liquidators updated South Africans on the issue in a statement on Nov. 11, 2021. It was reported that ZAR 1.1B (~$68M) in cryptocurrencies and assets had been recovered. The recovered assets included three properties owned by Johann Steynberg, the MTI CEO, cryptocurrency, silver, and two Jaguar vehicles belonging to Steynberg.

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David is an electronic engineer with nine years of experience. He joined BeInCrypto to combine his passion for writing and his interest in fast-moving industries, cultivated from his university days. He hopes to make crypto easy to understand.

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