Connect with us

News

South Africa’s Financial Regulator Issue Warning to Crypto Investors

Published

on

South Africa crypto

The Financial Sector Conduct Authority (FSCA) of South Africa, on February 4, 2021, put out a press release on crypto-related investments, due to a large number of complaints received on the loss of savings and investments in cryptocurrencies via scams or ponzi schemes packaged as a crypto investment promising unrealistic high returns.

In the press release, FSCA briefly explained what cryptocurrencies are all about and made it known that they are not issued by a central bank. They are being traded, transferred or stored in a crypto-enabled wallet which can be used for payments, investments and funds-raising.

According to the Financial Sector Conduct Authority (FSCA), crypto-related investments are not regulated by them nor are these digital currencies under the control of any other government body in South Africa. When an individual makes an investment in any crypto project which later goes sour, the probability of getting their money back is low and they will have no recourse against anyone.

Back in December 2020, Mirror Trading International (MTI), a bitcoin trading firm, went into provisional liquidation after the CEO, Johann Steynberg took along with him, a large amount of bitcoin that investors had entrusted to the company. Steynberg had allegedly absconded from the country to Brazil.

Mirror Trading International (MTI) claimed to have more than 260,000 investors from 170 countries in the world, in which they were promised 10% Return on Investment (ROI) per month. The investigations conducted by FSCA into the company’s operations shows that it kept no accounting records, or any kind of user database and there was no evidence of successful trading by MTI.

Earlier in August 2020, the Financial Sector Conduct Authority (FSCA) had already warned potential investors against putting their funds in Mirror Trading International (MTI), based on the fact that the firm had been operating without a mandatory financial service provider license and an unusual return on investment. This move came after the promoters of MTI in the United States were shut down by regulators in July 2020.

The increasing rate of crypto scams in the country is alarming, which is driving the South African authorities towards sounding the cryptocurrency health warning alarm again and finding measures to regulate certain aspects and players in the crypto space. Despite the high level of risk associated with crypto investments, it is further compounded with diverse ponzi schemes.

Whilst the South African government has flirted with the regulation of cryptocurrencies for years, they are increasingly forced into creating laws that will restrict transactions of cryptocurrencies. These fraudulent investment schemes like MTI, take advantage of the popularity of cryptocurrencies across the world, and use it to siphon the public of their hard-earned money.

The South Africa Financial Sector Conduct Authority (FSCA), reveals that they are working with the other members of the Intergovernmental Fintech Working Group (IFWG) to better understand and regulate appropriate cryptocurrencies in South Africa. These regulations will be rolled out during the coming months. The FSCA had already classified cryptocurrencies as financial products back in December, 2020.

The crypto watchdog, FSCA, further advised the masses to do their own prudent research and make sure to look out for the license of FSCA before investing in any crypto-related project. The FSCA also discouraged investment of retirement funds until regulation has been finalised to safeguard investors.

Comments
Continue Reading
1 Comment

1 Comment

  1. Eugene

    11 February 2021 at 3:43 PM

    Informative

Leave a comment:

Market Watch

Jack Dorsey‘s Square to develop open source Bitcoin mining

Published

on

Jack Dorsey Bitcoin

On Friday, October 15, Twitter CEO Jack Dorsey announced that American fintech company, Square, would be looking to get into Bitcoin mining. Jack Dorsey who is also Square’s CEO announced this on Twitter which subsequently sent waves through the bitcoin market, surging its price to almost a record high, rising over $62,000 over the weekend. According to the Twitter boss, Square is looking to building an open source Bitcoin mining system that would be available to individuals and businesses.

Sharing his thoughts further on the initiative, he stated that “Mining needs to be more distributed” and that “the more decentralized [mining] is, the more resilient the Bitcoin network becomes. He also mentioned the apparent inaccessibility of mining stating that “Bitcoin mining should be as easy as plugging a rig into a power source.

Dorsey also believes that bitcoin mining “needs to be more efficient and that “clean and efficient energy use” would be undoubtedly beneficial to the digital currency in the long run.

Dorsey ended the thread by saying that a “technical investigation would be undertaken by a Square team led by Jesse Dorogusker, Square’s hardware lead. If successful, this initiative would be another of Square’s bitcoin focused projects which includes a Bitcoin hardware wallet.

Comments

Decentralize Daily

From Crypto and Blockchain to AI, Fintech and Web 3.0 delivered twice in a week (Mondays and Fridays)

Continue Reading

News

Financial Leaders from G7 Release Guidelines for Central Bank Digital Currency

Published

on

Source: World Atlas

At a meeting that was held in Washington, yesterday, October 13, G7 leaders discussed central bank digital currency and endorsed 13 public policy principles with regards to their implementation. The financial leaders from G7 agreed that CBDCs would complement cash and should not be detrimental to the monetary system. The G7 leaders have been discussing CBDCs this week concluding that they should do no harm and meet rigorous standards.

It should be noted that G7 includes finance leaders in advanced economic nations comprising of Canada, France, Germany, Italy, Japan, the U.S and the U.K. the G7 leaders make it mandatory that any newly launched CBDC should not harm the central bank’s ability to perform its duty of maintaining financial stability. In a joint statement by the G7 finance ministers and central bankers, they said that, 

“Strong international coordination and cooperation on these issues help to ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for users and the wider financial system.” 

The joint statement further states that CBDCs are complements to cash and could serve as a liquid or safe settlement assets with an added advantage of anchoring existing payment systems. CBDCs issuance should be entrenched in a long-standing public commitment to transparency, rule of law, and sound economic governance. The statement added at CBDCs must be so efficient that they are fully interoperable on a cross-border basis. 

The G7 leaders agreed that they had a duty to minimize the incidence of ‘harmful spillovers to the international monetary and financial system” 

The G7 statement reiterated a similar statement earlier made by G20 that no global stablecoin project should begin operation until such a token has addressed legal, regulatory and oversight requirements. 

Countries like China and Nigeria are ahead of the pack with regards to the adoption of digital Yuan and Naira respectively. China’s crackdown on cryptocurrency may be a step forward for the country’s plan to promote its digital Yuan. Nigeria, on the other hand, postponed the launch of its eNaira in deference to the 61st anniversary of Nigerian independence on Oct 1. 

However, countries like the US and the UK are dragging their foot with regards to the introduction of CBDCs to their financial system. There are insinuations that America is in danger of being left behind technologically and financially if it doesn’t get serious with the implementation of CBDC in its financial system.

Comments
Continue Reading

Learning Guides

Understanding Speculation and Crypto Volatility

Published

on

Everyone who dabbles in the crypto industry learns almost immediately that the market is very volatile and oftentimes things can change very quickly. That volatility is the fundamental reason why some investors make absolutely stunning gains in so short a time and others lose a lot of money as well. Trading in crypto is one of the riskiest ventures any person can undertake and as they say, it’s not for the faint of heart. The risks can be mitigated of course and sometimes depends specifically on the coin or crypto asset being traded on, barring general market trends.

Nevertheless, to get to the bottom of the volatility concept, one must understand speculation in the market. To start off, the concept of speculation isn’t limited to cryptocurrencies, on the contrary, speculation has existed for as long as economics and trading has. But it is worth saying that speculation is often a feature of novel sectors, assets, commodities and the like. So, even though cryptocurrencies have been around for more than a decade, they’re still in their infancy as far as markets go. One could say that the market is still trying to find its feet.

One of the fundamental reasons why cryptocurrencies are so volatile is that they are fundamentally backed by nothing of value outside the attention that they get. Unlike many fiat currencies which are either pegged to another currency’s value or whose value is unilaterally determined by a central authority, cryptocurrencies only derive value as a function of how many people are willing to use is to transact, i.e. trust in the asset because other people trust it. As a rule of thumb, the larger the number of people who accept the asset, the more valuable it becomes.

This is one of the hallmarks of speculative trading. In the crypto world or in any market that’s novel and untested, many people are in it to win it which means their strategies in trade has the objective of making as much profits as possible in the short term. Therefore, the market enters a subtly dangerous cycle of rapidly changing prices of assets. Basically, investors typically buy assets when prices are low and wait. As more investors are attracted to the commodity for its low prices, it sets off a cascade where more people buy in, causing the price to steadily rise. 

However, all good things must come to an end and it almost always gets to a breaking point whereupon the price gets high enough for investors to begin to sell. This reverses the earlier cascade and as more and more investors pull out, the prices can fall dramatically causing even more to sell off in fear of losing whatever investments they have left. The prices having fallen resets the game and primes investors to begin buying again.

Volatility has been one of the talking points of many critics of cryptocurrencies often comparing it to a Ponzi scheme. And in certain cases, persons of interest with large pulls and audiences can substantially affect the rate at which prices rise and fall. Other factors include government regulations. Volatility at its core reflects the often chaotic nature of trade and market interactions and human hopes and fears.

Comments

Decentralize Daily

From Crypto and Blockchain to AI, Fintech and Web 3.0 delivered twice in a week (Mondays and Fridays)

Continue Reading

TRENDING

%d bloggers like this: