South African consumers got another warning from the Financial Sector Conduct Authority (FSCA) yesterday to be ’extremely cautious and vigilant’ in trading in cryptocurrencies. Photo: File
South African consumers got another warning from the Financial Sector Conduct Authority (FSCA) yesterday to be ’extremely cautious and vigilant’ in trading in cryptocurrencies. Photo: File

FSCA issues second warning to consumers about trading in Bitcoin

By Edward West Time of article published Mar 19, 2021

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CAPE TOWN - SOUTH African consumers got another warning from the Financial Sector Conduct Authority (FSCA) yesterday to be “extremely cautious and vigilant” in trading in cryptocurrencies.

The price of a Bitcoin has risen more than tenfold, from $5 300 (currently about R78 614) at the height of the Covid-19 crisis to more than $60 000 last weekend, driven largely by institutional demand globally.

Yesterday, it was trading at $57 766.70 per Bitcoin. The FSCA said it had seen “with concern the increasing volume of crypto-assets-related losses suffered by financial consumers in the past three months”.

The institution published its first warning about the risky nature of crypto assets three weeks ago following a large number of complaints to the FSCA and regular media reports of consumers losing some, if not all, of their savings in high-risk crypto investments.

Crypto assetsare not issued by a central bank and stored on a block-chain, are traded, transferred and stored electronically. They have been used for payments, investments and capital-raising. The regulatory outlook for investors, however, is uncertain and tightening.

“Crypto-related investments are not regulated … in South Africa. As a result, if something goes wrong, you are not likely to get your money back and will have no recourse against anyone,” the FSCA said.

It said it was working on measures to regulate certain aspects and players in the crypto asset space, and these would be rolled out during the coming months.

Retirement fund trustees must also remain vigilant in their fiduciary duties before mandating investment managers to expose their fund assets to risks associated with crypto assets,” the FSCA said, adding that it “discourages such investments by retirement funds until regulation has been finalised.”

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