South Africa’s regulatory body, the Financial Sector Conduct Authority (FSCA) like other global regulators, has warned citizens to be wary of crypto investment schemes that sell hyperbolic returns on investment (ROI) amid crypto’s bull run. Meanwhile, the country’s tax body recently sent out requests to taxpayers to reveal crypto-related activities.
FSCA Calls for Caution in Crypto Investment
The FSCA issued the warning via a press release on Thursday (Feb. 4, 2021). According to the South Africa financial regulator, citizens who engage with crypto investment schemes do so at their own risk.
Meanwhile, the FSCA’s warning comes as a result of complaints received from several aggrieved South African investors who lost funds through firms promoting rypto investments. These firms which are unregulated by FCSA promise investors hyperbolic returns.
The regulatory watchdog while highlighting the risks involved with crypto investment, advised consumers to be cautious. According to the FSCA, investors should seek proper investment advice before committing to crypto high yield investment programs (HYIPs). Also, avoid putting a large chunk of money into crypto investment and for traders not to “be afraid of being left out of the next big thing.”
However, FSCA is working on combating the fraudulent activities in the space, as well as regulating parts of the crypto industry. Part of its statement reads:
“It is for this reason that the FSCA is working at finding measures to regulate certain aspects and players in the crypto asset space. These measures will be rolled out during the coming months and we are working with other members of the Intergovernmental Fintech Working Group (IFWG) to better understand and regulate where appropriate crypto assets in South Africa.”
As previously reported by BTCManager back in April 2020 the IFWG stated that it was necessary to establish strict regulatory policies for the emerging crypto industry.
The FSCA’s warning is similar to a recent warning issued by the U.K. Financial Conduct Authority (FCA). Back in January, the FCA asked investors to be wary of firms promoting crypto investments, adding that consumers could incur serious losses.
South Africa Tax Agency Modifies Audit Request to Clampdown on Crypto Traders
Meanwhile, reports stated that the South African Revenue Services (SARS) has issued audit requests to taxpayers about their crypto-related trading activities. Part of the information required by SARS include reasons for buying crypto and also trading details from exchanges along with bank statements. The SARS audit request is similar to the U.S. Internal Revenue Services (IRS) question on part of its updated 1040 form.
Meanwhile, Tax Consulting South Africa, a tax consulting and advisory firm, stated that the change in SARS’ audit request means that the tax agency is looking to clampdown on non-compliant crypto traders in the country.
“It is feasible to understand that SARS is in the process of ensnaring culpable taxpayers who have not disclosed their cryptocurrency-related trading profits and / or losses.”