South African crypto firms warn opaque regulations are harming the industry

South African crypto firms are threatening to move abroad if local lawmakers are unable to provide regulatory clarity to its domestic digital asset industry.

Speaking to Bloomberg, Sean Sanders, the CEO of local crypto investment platform Revix — who plan to relocate their head office to the United Kingdom, described the South African government as being “incredibly slow” in clarifying regulatory guidelines for the crypto industry.

“That leads to businesses looking internationally. In an unregulated environment, a customer arrives at our platform with skepticism, and rightfully so,” he said, adding: 

South Africa seems to go in the opposite direction of some of the more developed market pioneers and innovators in this space. For regulators to apply hundred-year-old securities regulations to the novel cryptocurrency asset class seems lazy.”

Revix is also planning to launch an additional office in Germany.

South African crypto firms are claiming the country’s financial institutions are unwilling to provide banking services to them, with Marius Reitz, the African general manager of global crypto exchange Luno, warning the apparent banking embargo will stifle local adoption:

“This makes it very difficult for customers to buy Bitcoin with their local fiat currency,” he said.

South African adoption has also been hampered by a recent prevalence of scammers leveraging crypto to lure their victims. Last month, South Africa’s Financial Sector Conduct Authority, or FSCA, reported the number of crypto scams is on the rise amid the current bull market. In a Feb. 4 communique, the FSCA warned investors:

“Do not be pressured to go with the flow and do not be afraid of being left out of the next big thing.’”

In December 2020, Cointelegraph reported that alleged South African Ponzi scheme, Mirror Trading International, had been placed into provisional liquidation by regulators after receiving more than 23,000 Bitcoin from investors.

An investigation by the FSCA revealed the firm didn’t keep accounting records or maintain user databases. Investors were unable to withdraw funds, with the FSCA speculating Mirror’s CEO, Johann Steynberg, may have fled to Brazil.