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FSCA issues warning on crypto assets

If something goes wrong, you’re unlikely to get your money back and you’ll have no recourse against anyone.
Image: Shutterstock

The Financial Sector Conduct Authority (FSCA) issued a “health warning” on crypto assets on Thursday, after receiving a large number complaints from South Africans who have lost their savings through crypto-related investments.

Crypto-related investments are not regulated by the FSCA, though draft proposals for regulation were issued last year which would bring cryptos under the Financial Advisory and Intermediary Services (Fais) Act.

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Read: Crypto intermediaries must now be licensed FSPs

“As a result, if something goes wrong, you’re unlikely to get your money back and will have no recourse against anyone,” says the FSCA statement.

Crypto-assets – also called cryptocurrencies – are digital representations of value that are not issued by a central bank.

The FSCA warns of the following risks:

  • Crypto investment firms may be overstating the likely payouts, or understating the risks;
  • Investing in crypto assets, or investments and lending linked to them is high risk and those who participate should be prepared to lose all their money;

  • There’s no guarantee that crypto assets can be converted back to cash, which puts investors at the mercy of market supply and demand; and
  • The price of crypto assets is determined by market sentiment, making it extremely volatile. Multi-level marketing and Ponzi schemes are able to exploit fears of being left out, which draws in new investors, so further driving up the price of highly volatile assets.

Regardless of their risk appetites, the FSCA urges investors to allocate only a small percentage of their portfolios to cryptos.

Scam alert

It then issued the following scam alert:

  • The risk of losing all of the money invested in schemes promising high returns means that prospective investors should, before investing, obtain proper advice regarding the overall suitability of such a high-risk product in their investment portfolio and the impact on it should it fail.
  • Investors are urged to invest with open eyes as to the high risks involved, understanding that these types of investments are not appropriate for the vast majority of the South African population and that more appropriate and balanced investment products are available and offered by licensed financial service providers regulated by the FSCA.
  • Do not be pressured to go with the flow and do not be afraid of being left out of the ‘next big thing’.
  • There are no safe ‘quick rich’ schemes in the world. When it comes to your retirement, take a prudent and responsible approach and never put a large percentage of your wealth into any investment product. Diversification of risk is the most important principle for long-term wealth creation and preservation.

Read:
Finalmente Global placed in final liquidation as MTI dominoes start falling
MTI: Provisional liquidators appointed

The FSCA says it is working with the Intergovernmental Fintech Working Group (IFWG) to better understand and regulate “where appropriate”, crypto assets in SA.

It also advises retirement fund trustees to remain vigilant in their fiduciary duties before allowing investment managers to expose their fund assets to cryptos.

“The FSCA currently discourages such investments by retirement funds until regulation has been finalised to safeguard investors,” says the statement.

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We understand the risks
The larger risk is the ANC looting your money and earnings through their taxes.
Go figure where my money goes — idijits

Physical gold has no counter-party risk, and is immune to systemic failure (until they start mining the asteroid belt, or work out how to extract the gold from seawater), and your local Muslim merchant will always take gold. On the other hand, when the central banks tank whichever crypto-whatwhat you’re currently invested in, your one’s and zero’s aren’t going to be held in high regard by anyone.

Gold just a pain to transport/divide/secure and can be confiscated by governments as per 1930s.

So in light of that risk, I would keep a diverse portion of both gold/metals and crypto/NFTs, knowing that there are scenarios where either are worthless

100% agree!
Scam Alert for the anc should be level 5…

If i can’t feel, touch or smell it, i don’t want it

Gold,Silver and even rare coins will always remain a good and safe investment, as is cash always King!

Not the same growth as crypto, but at least i sleep at night

Staying out of debt up to your knees will also help.. Get rid of your debt, then you can start shopping around for good investments

…. U mean u sleep with only one eye closed at night. – that’s the problem with physical possession.

My wife is a physical possession and i sleep just fine

Pensioners beware – stay away from these ”dodge-coins” – you won’t have a ”kyk-weer” opportunity to make money back, once lost!
”The FSCA says it is working with the Intergovernmental Fintech Working Group (IFWG) to better understand and regulate “where appropriate”, crypto assets in SA.”

It also advises retirement fund trustees to remain vigilant in their fiduciary duties before allowing investment managers to expose their fund assets to cryptos.

“The FSCA currently discourages such investments by retirement funds until regulation has been finalised to safeguard investors,” says the statement.
These scam alerts are frightening!

Scam alert

It then issues the following scam alert:
• The risk of losing all of the money invested in schemes promising high returns means that prospective investors should, before investing, obtain proper advice regarding the overall suitability of such high-risk product in your investment portfolio and the impact on it should it fail.
• You are urged to invest with open eyes as to the high risks involved, understanding that these type of investments are not appropriate for the vast majority of the South African population and that more appropriate and balanced investment products are available and offered by licensed Financial Service Providers regulated by the FSCA;
• Do not be pressured to go with the flow and do not be afraid of being left out of the “next big thing”.
• There are no safe “quick rich” schemes in the world. When it comes to your retirement, take a prudent and responsible approach and never put a large percentage of your wealth into any investment product. Diversification of risk is the most important principle for long term wealth creation and preservation.

What does the FSCA mean by “No recourse in crypto”??

The other day I phoned the Litecoin Call Centre & managed to get through….

They even acknowledged my Facsimile I sent.

Hahaha. . . can you imagine the “currency of the future” using the same old technology to communicate from an age when we had “ticky boxes”.

Sounds like the service you receive when one phones your local municipality!

Ok FCSA. As long as you understand that I am not obliged to take your advice no matter how sincere it is.

Besides, volatility is a great thing in these flat markets. I do not really see the problem with crypto, its the middlemen/middlewomen who are the skelms.

I believe this might not be aimed directly at you. In same vein, the people that this is aimed at are very unlikely to interpret market conditions and are therefore vulnerable to significant loses.

No recourse?? Isnt that is for the courts to decide? Told you!, this is how the MTI crew will get away, now if they ever make it to court to face charges thier laywers will say,” the FSCA said there is no recourse…also crypto is not real money so how can my clients be guilty of stealing something that isnt real”. Friendly reminder that they have been inlvolved in multiple past ponzi schemes and have yet to be brought to justice. Such an irresponsible statement it borders on collusion.

Absolutely, Crypto is a trustless P2P network.

Handing your crypto over to 3rd parties is as dumb as trusting Fund Managers with your hard earned currency!

Just like Steinhoff investors, there is no getting your money back!

DON’T DO IT!

Maybe the FSCA should become a watchdog for government spending – imagine all the bulletins they could send out to unsuspecting taxpayers

The FSCA should issue a similar warning about their employer, Luthuli House. They should warn citizens against voting for the ANC. If, as proven before the Zondo Commission, it all turns out to be a scam, a Ponzi-scheme, a fraud, an act of plunder, then citizens won’t have any resource against the organised crime syndicate called the state.

The FSCA enforces fit and proper legislation, money laundering laws and the FAIS act upon honest citizens but they fail to judge their employer according to the same set of rules.

I ask you, with Luthuli House as their employer, what moral authority does the FSCA have?

I concur yes a stern warning against voting for the ANC could be a catchy phrase. It’s just sad that all these scams result in nothing but pain and lifelong hardship. Look at the experts we can’t solve unemployment, taxes, corruption, voter failure, complete definition of insanity. The IMF made it clear no more lending. Yet we are stuck in this cylical cycle. Debt Busters confirm applications have soarn in January. Worst case scenario we are deeper into debt hole whereby we cannot get out. That GDP to debt ratio is closing in. Eventually the ratio will be equalivent to our GDP output. Imagine 100% debt to GDP ratio.

Yes, imagine we had a debt to GDP ratio like quite a few European countries, or even worse the USA’s debt to GDP ratio. For all the lecturing that first world countries do to 3rd world countries, they don’t take their own medicine.

Oh, you are the bloke who put the Krugerrands in a sealed drain pipe buried under the tree in your backyard.What is your address again, we can discuss this over a crowbar. Oh you are now on your way to OR Thambo en route to Seychelles? Pity I missed you, but I have a fella in customs that will help you along nicely, Regards.signed : Big Gun no One

Unless I misunderstand, they’re not slamming crypto, but pointing out that some of the schemes that sprung up around crypto is dodgy (like MTI). If indeed they warn against crypto, then where is the warning against fiat money? That’s not guaranteed, and neither is my LA, your RA, or some other bloke’s shares or ETF’s. Ask the Sharemax people to what extend FSCA helped them and that will tell you how you should read this declaration.

Dear FSCA,

Thank you for the warning. I just want to remind you that every single person on earth will die, yet we choose to experience life and give birth.

Don’t listen to the FSCA.

Btw, since you mention you will die one day, can I have ALL your money?

(…yes, I will also die, but not today. Now give! )

😉

Having a crypto hot wallet at Luno is not necessarily an “investment”. It is probably more like having a dollar account at a bank.

The exchange don’t promise you any return?

Its a hedge against a crooked anc government that like the country will destroy its own currency.

The FSCA is just an arm of the anc so chances are what they are letting you believe is nowhere near the truth. They want to get a handle and some control of your wallet or your service provider (exchange) will be forced to sing all about what you have an have not.

It will just drive people to more risky ways of acquiring and hodling Crypto.

So Mr. FSCA…. As an arm of a crooked, criminal organization called the anc I for one don’t believe in ANY of your “good” intentions.

I bought Steinhoff shares at their almost height and had to cut my losses when the price went rock bottom. I am again a happy Steinhoff investor, having the share price climb nicely the last couple of months.

Having said that, it was my risk that I took and it is paying off. I am also investing in Crypto currency, which I believe is the future of commerce, where your assets are nicely tucked away from greedy hands in a cookie jar.

Study the moving average price of any Crypto coin. The trajectory is constantly upwards. Use that to your advantage.

End of comments.

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