Rising number of reported Crypto Scams in South Africa prompts Regulators to Hand out it's Second 'Health Warning' under Three months

By: Dickson Arinze

Rising number of reported Crypto Scams in South Africa prompts Regulators to Hand out it's Second 'Health Warning' under Three months

March 30, 2021 5:39 PM

The number of reported scam activities in South Africa keeps soaring. The Financial Sector Conduct Authority has been propelled to issues a second notice relating to crypto investments in the country.


So many South Africans has reportedly suffered losses, which could be linked to crypto investments in the country. This will be the second notice handed out by the South Africa FSCA in just under three months.


Labelled the "Healthy Warning," the regulators reminded investors that crypto investments are not regulated by the authority or any governing body, stating that there will be no legal assistance is by chance something goes wrong along the line.


Promise of Hige Rewards from Unregulated Firms 


Recent collapse of South African based bitcoin Ponzi scheme MIrror Trading International and a host of other has kicked the FSCA into handing out the second warning. As previously reported by Coinnewsafrica.com another South African Bitcoin exchange ICE3X has been silent after noticing disparities in BTC balances halting trading and bitcoin withdrawal in the process.


User of the said exchange have been feeling uneasy with the continued silence from ICE3X officials. Meanwhile, according to a 2020 crypto scam report made by Chainalysis the blockchain analysis firm, MTI was named the biggest crypto scam in 2020.


However, the regulators also zeroes in on schemes that promise very high rewards which in most cases are often made by unregulated entities. The regulators warns:


Crypto assets comes with high risk and adding the recent high scam activity, as well as companies being able to target clients with marketing material that features the rewards but not the risk involved in crypto investment. Though the South Africa regulators confirmed it is working on finding ways of regulating certain things as well as crypto players in the space.


Proposed Crypto Regulation Paper


In it's latest "Health Warning," the financial regulators revealed steps taken by various South Africa regulatory body as they move in to regulate the cryptocurrency industry in the country. 


As the letter entails, the FSCA is part of the 'IFWG' an International government Fintech working group. The group published a position paper in Nov. 2020. In the position paper, the group revealed various proposals about crypto assets regulation.


The regulators repeat in the warning document that the position paper currently is ineffective and doesn't change or impact the legal status of crypto assets in the country.


However, the South Africa regulators asserts that it expects a rollout of the new standards that is being worked on and will launch in coming months, which will govern the crypto assets industry.