South Africa’s financial services regulators, the Financial Sector Conduct Authority (FSCA), has stated that anything to do with cryptocurrencies is suspect.
“Every crook is using cryptocurrency, so people must be very careful when dealing with anything crypto-related,” said FSCA head of investigations and enforcement Brandon Topham.
“Not all players in the field are [crooks], hence the need to regulate the advisors and intermediary players in this field. [Then] if people are going to choose to ‘invest’ at least they are using legitimate suppliers.”
Topham said this kind of regulation is what South Africa’s financial regulators are working towards.
“There are some very good developments and technologies coming from the crypto world but because it has limited traceability it is the method of choice for crooks to get away,” Topham said.
“If we can regularise the industry a bit then there will be more certainty and credibility to users. Right now it is a free for all.”
Playing in cryptocurrencies like gambling
Questioned about his statement equating “playing” in cryptocurrencies to gambling, Topham told MyBroadband that perhaps gambling is too liberal a term.
“Speculating in an asset that has no legal basis behind it, no legal entity to pay the bearer and your only chance of getting paid in the future being a ‘hope’ that someone, anyone, somewhere will give you some value for your crypto asset amounts to something… maybe gambling is too liberal a word.”
Topham said that perhaps it is more like buying a Lotto ticket than gambling in a casino.
“As long as people have confidence in the crypto it may hold some value, but if you look at the many crypto assets which have been launched, failed, and dropped value I think the point is clear. It is a gamble.”
Topham also said people who are interested in cryptocurrency should rather go to a casino, because it is at least a regulated industry.
“A casino will play by the rules of the regulations around gambling,” he argued.
“There are no rules in crypto, so if you want to take a chance on someone paying you in the future then so be it.”
Topham emphasises that this does not mean government is looking to ban cryptocurrencies.
“We support everyone’s right to purchase and use crypto. Just understand that there is no certainty as to the value it will hold (or not) in the future.”
No regulation of cryptocurrencies in South Africa
MyBroadband also asked Topham to clarify his remarks that cryptocurrencies will never be regulated in South Africa.
“Based on all current discussions by our financial sector players — and most countries — the crypto assets themselves are probably not capable of being regulated. [That’s why] people like it,” Topham stated
“However we want to limit the risks by regulating the advisory and intermediary services which go with crypto.”