Complaints against crypto asset providers can now be probed by ombud

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Crypto coins.
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  • Complaints against cryptocurrency assets providers can now be investigated by the Financial Advisory and Intermediary Services ombud.
  • This offers another channel for the oversight of crypto asset providers in South Africa.
  • Cryptocurrency prices have soared since the beginning of the new year.
  • For more financial news, go to the News24 Business front page.

Complaints against crypto asset providers can now be investigated by the office of the Financial Advisory and Intermediary Services (FAIS) ombud, adding to oversight of the digital asset class.

The decision, announced by the office of the FAIS ombud on Tuesday morning, follows last year’s declaration by the Financial Sector Conduct Authority (FSCA) that crypto assets are a financial product under the FAIS Act.

That move has brought crypto asset providers under the jurisdiction of the FSCA, and by extension the FAIS ombud, whose mandate is to investigate and resolve complaints in terms of the FAIS Act, which regulates the rendering of certain financial advisory and intermediary services to clients.

The office of the FAIS ombud said that it is "committed to resolving complaints in a procedurally fair, informal, economical, and expeditious manner, with reference to what is equitable in all circumstances".

According to its latest annual report, the office of the FAIS ombud received 11 827 complaints in the 2021/22 financial year, of which 4 957 were dismissed, 3 791 were referred to alternative bodies, and 1 269 were settled in favour of the complainant. Only 17 complaints, or 0.14%, related to cryptocurrencies.

As News24 reported last year, the FSCA treats crypto asset providers the same as licensed financial services providers, meaning that crypto investors enjoy the same level of protection by authorities that is afforded to investors putting their money into unit trusts, retirement funds and other investment products regulated by the FAIS Act.

READ | Crypto will now be regulated in SA - with fines or jail time for offenders

This will be the case until November of this year, when crypto asset providers must register for a licence with the FSCA. Being considered an FSP also means that the General Code of Conduct for Authorised FSPs and Representatives, which holds that an FSP must "at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interests of clients and the integrity of the financial services industry", is applicable to crypto asset providers.

The crypto market has been under scrutiny since the high-profile collapse of trading platform FTX in late 2022, which at one point reached a value of $32 billion (R544 billion). Cryptocurrency tycoon Sam Bankman-Fried has since been arrested and faces allegations of fraudulently raising funds and then misusing them.

READ | SEC charges disgraced crypto tycoon Sam Bankman-Fried with defrauding investors

Crypto asset prices have also soared since the beginning of the new year, with bitcoin increasing by 28% to a three-month high. The alt-coin Solana has seen its value increase 48% in the last week.

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