Cryptocurrencies to come under regulation in South Africa

The Financial Sector Conduct Authority (FSCA) of South Africa has tabled for consideration a proposal to regulate cryptocurrencies. This was driven by growing public interest and the uncovering of a large Ponzi scheme, according to Finance Magnates.

Earlier regulatory attempts to impose a framework for digital assets did not gain support. Scammers have actively exploited this, enticing citizens with promises of high returns.

The latest high-profile incident of this kind was the collapse of Mirror Trading International (MTI). The company defrauded 28,000 investors, who entrusted 23,000 bitcoins (about $718.3 million at the current rate). The organisers promised monthly returns of at least 10%.

During MTI’s bankruptcy proceedings, it emerged that the company kept no accounts and did not collect client information. The liquidators were able only to recover a list of 170,000 email addresses.

“When something becomes a Ponzi scheme, our jurisdiction ends. We need police and prosecutors to act quickly and put people in prison,” said the FSCA’s enforcement department head Brandon Tofem.

Industry observers noted that the MTI case could grant FSCA the authority to regulate the cryptocurrency market, which it has sought for a long time.

In November, the Financial Sector Conduct Authority presented a draft regulation, under which Bitcoin is treated as a financial product.

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