Cape Town - Legislation has been proposed to regulate companies dealing in cryptocurrency, namely Crypto Asset Service Providers.
However, the legislative process will have to wait until after next year’s elections.
The move, announced at last week’s Crypto Variable summit in Cape Town, follows the passing of a proposal by the DA Federal Council from DA MP Ashor Sarupen, and the party’s provincial spokesperson on Finance, Economic Opportunities and Tourism, Cayla Murray.
Murray said: “With multiple recent international financial scandals involving crypto companies, the need for such legislation has become clear.”
She said if SA were to escape its Financial Action Task Force grey list status it was crucial that the new wave of financial service providers related to crypto were properly regulated.
Murray’s remarks come on the heels of a declaration by the Western Cape High Court that Stellenbosch-based Bitcoin firm Mirror Trading International (MTI) is an unlawful Ponzi scheme.
In a scathing 45-page judgment, acting Judge Alma De Wet said: “MTI’s business clearly amounted to a fraudulent investing scam.”
The judge said that statements made by the scheme’s promoters themselves, including MTI chief executive Johann Steynberg, had inadvertently provided evidence that MTI was a pyramid scheme.
“People all over the world, and South Africans are no exception, are bewitched and fascinated by any idea or scheme promising, in most cases, instant wealth.
“A further attraction of these schemes is the perception that the money will keep rolling in with little or no effort by the participants, the hardest part being to count one’s money,” she said.
The Cape Town judgement was handed down a day before the US Commodity Futures Trading Commission announced that a Texas judge had entered an order of default judgment and permanent injunction against Steynberg.
The US order requires Steynberg to pay $1.7billion (R31 billion) in restitution to defrauded victims in the US and another $1.7bn civil monetary penalty, which is the highest civil monetary penalty ordered in any CFTC case.
A press statement from the Commission said: “This action is also the largest fraudulent scheme involving Bitcoin charged in any CFTC case.”