Thanks to the SARB and Fed
The crypto market is under siege. The losses are causing bankruptcies in some of the main exchanges – with the latest, FTX, being the third to declare bankruptcy this year.
This is a major talking point for market watchers, a risk for central banks that have stability mandates and painful for those wxxhxoxtxoxo. k – XXXCREDIT their savings and leapt onto the bandwagon of crypto-market investing.
On October 19, the Financial Sector Conduct Authority (FSCA) classified crypto assets as a financial product in terms of the Financial Advisory and Intermediary Services Act (Fais). It has defined crypto assets as a digital representation of value that is not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility; applies cryptographic techniques and uses distributed ledger technology.
OK, but so what? There are hundreds of cryptocurrencies and assets, with no underlying economic activity or intrinsic use. They are poor and volatile W:5.4,989p stores of value. Of three of the most popular ones — bitcoin, ethereum and dogecoin — their dollar value has declined 64%, 67% and 50%, since January.
Fortunately, the FSCA prohibits retirement and pension funds from investing in crypto assets. One would then ask why the FSCA classifies them as assets, yet prohibits them for pension funds.
Because they are now financial products, they fall under the Fais Act, which means institutions that offer advice or sell them must be registered financial institutions, and individuals who offer advice must be qualified to declare the risks involved. Failure to do that implies they can be reported to the Fais ombud and charged for fraud.
So, we can regulate them and protect the less-informed, including some celebrities.
And excluding them from retirement and pension funds safeguards people’s hardearned savings. That’s responsive regulation that sees the risks and moves in quickly to protect citizens.
Let’s celebrate the Fed and the SA Reserve Bank for that.