Crypto con­fu­sion

The Citizen (KZN) - - News - Roy Cokayne Money­web

Investment­s in cryp­tocur­ren­cies such as bit­coin are lead­ing to an in­creas­ing num­ber of com­plaints be­ing re­ceived by the of­fice of the Fi­nan­cial Ad­vi­sory and In­ter­me­di­ary Ser­vices (Fais) Om­bud.

How­ever, as­sis­tant om­bud Tho­bile Masina says the of­fice is fac­ing a dilemma in fi­nal­is­ing and is­su­ing de­ter­mi­na­tions on cryp­tocur­rency com­plaints be­cause of chal­lenges re­lated to the def­i­ni­tion of cryp­tocur­rency and whether it is a fi­nan­cial prod­uct or an al­ter­na­tive cur­rency.

The lat­est Fais Om­bud an­nual re­port lists cryp­tocur­rency com­plaints among the new trends.

Com­plaints re­late to cases where these cur­ren­cies are be­ing mar­keted as main­stream in­vest­ment so­lu­tions; in some cases, the per­for­mance is even guar­an­teed.

But no dis­clo­sure is made that these prod­ucts are un­reg­u­lated, or what the risks as­so­ci­ated with these investment­s are and the im­pli­ca­tions this has on the com­plainant’s in­vest­ment.

The re­port states: “In­ves­ti­ga­tions into a few mat­ters are at an ad­vanced stage and this of­fice is look­ing to is­sue its first de­ter­mi­na­tion on this type of in­vest­ment early in its 2019-20 fi­nan­cial year.”

The re­port cov­ers the Fais Om­bud’s fi­nan­cial year to the end of March, but the of­fice has not yet is­sued any de­ter­mi­na­tions on cryp­tocur­ren­cies.

Masina says whether cryp­tocur­ren­cies do or do not fall within the def­i­ni­tion of a fi­nan­cial prod­uct will de­ter­mine whether the Fais Om­bud has ju­ris­dic­tion to con­sider com­plaints about them.

When the om­bud ini­tially dealt with cryp­tocur­rency com­plaints, its view was that they were not a fi­nan­cial prod­uct.

It was, how­ever, then en­gaged by the Fi­nan­cial Sec­tor Con­duct Au­thor­ity about whether cryp­tocur­rency could be a fi­nan­cial prod­uct and, if so, where it fits in among the fi­nan­cial prod­ucts iden­ti­fied in the Fais Act.

Peo­ple are look­ing for al­ter­na­tive means of in­vest­ing but are not nec­es­sar­ily get­ting into cryp­tocur­ren­cies through fi­nan­cial ser­vices providers (FSP)...

“They don’t iden­tify them as cryp­tocur­ren­cies be­cause peo­ple are pitch­ing them as just an in­vest­ment.

“If it is from a FSP, what type of in­for­ma­tion are they giv­ing re­gard­ing this prod­uct? The ar­gu­ment, es­pe­cially from FSPs, is that it isn’t a fi­nan­cial prod­uct, it’s just an al­ter­na­tive cur­rency.”

No dis­clo­sure is made that these prod­ucts are un­reg­u­lated or what the risks are.

Tho­bile Masina

as­sis­tant om­bud

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