Why the financial regulator should be worried it can’t do anything about the R51bn SA crypto ‘heist’

If you’re not into the bitcoin stuff, a quick brief on something that’s recently happened. 

In 2019 a, Johannesburg-based bitcoin investment company, Africrypt, launched. Apparently it promised x5 returns. It was run by South African brothers Ameer and Raees Cajee. Those brothers are now nowhere to be seen. More importantly, neither is the $3.6 billion that was invested with them.

Right, no stress right? This is South Africa! We may have our issues but our financial markets are pretty strong and secure so just get the authority involved. It’s not like $3.6 billion can just disappear. 

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Surely we have some powerful authorities that can make some calls, send some emails and find the Cajees and their loot. 

Urm, well this is awkward. 

Even if we could, the Financial Sector Conduct Authority is claiming, quite rightly, that crypto is beyond its mandate. This is because crypto currencies have no regulation in terms of financial law in South Africa.

This is strange, considering how every second billboard you pass these days is advertising some form wallet to invest in crypto. 

Beyond that, we all have that annoying dude at work who’s been compelling us to get into crypto since 2016. 

Funny. That dude’s been pretty quiet the last few weeks. For at least 5 years, crypto has been part of the zeitgeist in South Africa and only increasingly so.

Yet, for whatever reason, regulation seems to be something the legislature couldn’t care about. Perhaps our MPs are too comfy with their nice salaries that they don’t need to worry about investment instruments, but there’s still a duty to craft laws to protect the public.

…and if there’s one thing the public need protection from, it’s over-zealous promises of returns that lead to a $3.6 billion wipeout.

Credit to the Financial Sector Conduct Authority though. They’ve been lobbying for regulation of crypto for some time. They’ve even expressed concern “over the large number of scams being perpetrated by persons purporting to provide the crypto asset to the public”.

 In South Africa, it’s pretty huge for an authority to effectively say, hey, give us more work because we care about the public and this new thing is a bit of a problem.

Alas, our overpaid overlords have bigger fish to fry. 

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MPs are very busy people, sitting in committee meetings and then still having to take the time to raise campaign funds and occasionally debate a speech. I can’t begin to think where they must find the time to actually legislate. 

Our poor president is left to pay lip service to national problems like domestic violence while the few laws that do pass parliament sit collecting dust on his desk. 

I’m still waiting on those new copyright laws by the way. 

Oh and remember in 2008 when we had the draft Domestic Partnership Bill? A whole three separate parliaments had access to that document meant to protect women in unmarried relationships and yet, still today, the issues that that Bill was made to address are still ever apparent.

In short, the state takes forever to regulate anything. 

Granted, in many instances, it’s a bunch of complex issues. Not this though! Not crypto. In fact, it may just be a simple and quick regulation promulgated in a gazette. 

Here. I’ll do it for them:

I, Tito Mboweni, the minister of Finance hereby make these regulations under the power afforded to me by section 288 of the Financial Sector Regulation Act, 9 of 2017 and declare all forms of blockchain cryptocurrency financial assets under section 2(2) of the Act and afford the Financial Sector Conduct Authority authority over their regulation under section 2(5) of the Act.

Took me two minutes. Turns out I’d make a fantastic and efficient minister, it would seem.

But if the lawmakers keep limiting the power of the authority that is meant to protect the public from currency fraud, it would seem that there’s less purpose to that authority than what meets the eye.