# Bitcoin and other crypto to be regulated

- Link: https://dearsouthafrica.co.za/2021/01/22/bitcoin-and-other-crypto-to-be-regulated/
- Published: 2021-01-22T09:05:06+02:00
- Author: dearSA

![DearSA-bitcoin](https://cdn.dearsouthafrica.co.za/wp-content/uploads/2021/01/20190754/
DearSA-bitcoin.jpg "DearSA-bitcoin")

_by Louis Nel_

Bitcoin and cryptocurrencies have come a long way. From starting out as funny internet
money in 2008 to gradually capturing mainstream media attention. Suddenly even my
ageing mother wants to know how to buy bitcoin. This is not without its drawbacks,
as governments and regulators who wanted nothing to do with crypto also want in 
on the hype.

[click to have your say on the regulation of crypto ](https://dearsouthafrica.co.za/fais/)

In November 2020 the Financial Sector Conduct Authority (FSCA) issued a draft regulation
to classify crypto assets like bitcoin as a financial product.

This means that crypto companies will have to be registered as financial service
providers (FSPs) just like traditional financial service providers. This will include
a whole host of products and services like exchanges, ATMs, raising business capital,
investment funds, wallet apps and crypto custody companies. Where cryptocurrency
itself is hard to regulate, companies are easier.

According to the FSCA, the consumer should be able to make informed decisions about
companies that they choose to deal with. Recently, Mirror Trading International (
MTI) made headlines about its run-ins with the FSCA. The company took bitcoin deposits
on behalf of investors and promised returns of up to 10% per month. In the aftermath
of MTI, the FSCA wants to make it harder for companies like this to exist in the
vacuum between legislation and the rapidly advancing field of fintech.

News headlines often paint crypto as the preferred choice of criminals. in reality,
the US dollar and the traditional banking system is still very much used. South 
Africa is part of the Financial Action Task Force (FATF), the global watchdog against
money laundering and terrorist financing. Our local legislation needs to be aligned
with these international guidelines.

Regulation also forces companies to do proper due diligence on their customers, 
keep records of the origins of their funds and log all transactions. Where the borders
of countries are blurred with crypto, this legislation will seek to carve out digital
borders.

Bitcoin’s reason for existing rests on the failed policies of central banks. Existing
outside of the traditional financial system is what gives bitcoin power. It is also
the biggest obstacle to mass adoption and protection of consumers against scams.
Since bitcoin is backed by nothing, it is a free market that decides its value. 
It is also decentralised so that no government can shut it down or ban it. In this
Wild West of financial freedom, there is also ample scope for scammers to set up
shop.

Brandon Topham, an executive at the FSCA says it best. “Regulation must be as minimal
as possible to protect the public without hindering the market. Ignoring the issue
is worse than over-regulating. We need to find the right balance.”

[click to have your say on the regulation of crypto ](https://dearsouthafrica.co.za/fais/)