Crypto Complaints Have Increased Significantly Says South Africa Financial Sector Ombud

Nonkumbulo Tshombe, an advocate with the Financial Advisory and Intermediary Services (FAIS) Ombud, recently revealed that her office has noted a significant increase in the number of cryptocurrency-related complaints during the 2020/21 financial year.

Cryptocurrency Not yet Regulated

An advocate with the South African office of the financial services sector ombudsman, Nonkumbulo Tshombe, recently revealed that her organization has recorded a significant increase in the number of crypto-related complaints during the 2020/21 financial year.

Despite receiving such complaints, Tshombe is quoted in a report by Moneyweb explaining that her organization could not entertain such inquiries because cryptocurrencies are not yet regulated.

“Crypto-assets are not classified as a financial product, which means the product falls outside of this office’s jurisdiction,” explained the advocate.

Although South Africa does not yet regulate cryptocurrencies, it has intervened or forced action to be taken against certain crypto entities or individuals through the Financial Sector Conduct Authority (FSCA). For instance, in a bid to help investors in Mirror Trading International (MTI) recover their funds, the FSCA took several steps including raiding the home of one of the masterminds.

Also, as reported by News, the FSCA has issued public advisories that warn the public against dealing with certain cryptocurrency entities or their products. Such advisories have already prompted global crypto exchange Binance to curtail its activities in South Africa.

Cryptocurrency as a Financial Product

As the Moneyweb report notes, South Africa might be close to getting a cryptocurrency regulatory framework. To back this assertion, the report points to a statement by the FSCA in June indicating it was considering declaring cryptocurrency a financial product.

According to Tshombe, it is this declaration that will empower the FSCA to regulate the advisory and intermediary component of crypto assets. Also, this declaration will enable her office to investigate crypto asset-related complaints such as the 10,552 complaints it received in the 2020/21 financial year.

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