The FSCA has issues a warning to crypto investors in South Africa to trend cautiously when making their investments to avoid losses. This is attributed to increased losses that investors have suffered in the recent days.
The Financial Sector Conduct Authority (FSCA) has issued a press release that over the last three months; many financial consumers have undergone massive losses by investing in the crypto market. The FSCA is now advising these investors to take extreme caution when dealing with cryptocurrencies.
Crypto assets, which include cryptocurrencies, are digital transactions that are not issued by Central banks but they hold monetary value, as these assets can be used for trade and other financial activities. The most common crypto assets in the market today are Bitcoin and Ethereum although other assets are quickly gaining track in this growing market.
Late last year, the FSCA worked alongside the national Treasury, South African Reserve Bank and other financial institutions in South Africa to make sure that the crypto assets were regulated in the same way as other financial products and services. The ‘Draft Declaration of crypto assets as a financial product under the Financial Advisory and Intermediary Services Act was created as part of regulating this market. However, the act has not yet been implemented and is still under consideration.
The increased risk to financial consumers
The FSCA has continued to receive numerous complaints about increased losses suffered by investors. Most investors are also losing their savings and hard-earned cash to frauds related to crypto assets. The health warning issued to the public is to create awareness of the losses that investors are staring at if they do not take the necessary precautions.
Since the recommended act has not yet been implemented, the FSCA has clarified to the members of the public that the FSCA does not regulate crypto assets investments and hence in case of losses, the investor will not receive any reimbursements for his
The FSCA, on its press release, went ahead to sensitize the public about the increased fraud cases related to the industry. Unregulated firms offering crypto investments are also attracting unsuspecting consumers with the promise of high yields, which is usually not realized.
FSCA also addressed retirement fund trustees in the press release. They advised the trustees to remain vigilant and perform due diligence before investing their fund assets in risky crypto assets. On its last note, the FSCA stated that most of the crypto asset investments that look too god to be true are usually a scam.
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