The Crypto Scam Alert: What You Need to Know

South Africa’s Financial Sector Conduct Authority (FSCA) is once again raising the alarm about cryptocurrency scams, advising the public to really do their homework before diving into any crypto projects. In a recent press release, they underscored the high-risk environment that crypto investing has become.

Understanding the Risks

The FSCA is not a fan of the current landscape. With scams popping up like mushrooms after rain, the authority noted that the risks associated with cryptocurrency investments are getting worse, and they want investors to be savvy and cautious.

A History of Scams

This isn’t the FSCA’s first foray into warning investors. You might remember the clamor back in January when liquidators of an alleged Bitcoin scam sought more power to investigate what appeared to be a multi-level marketing scheme. In the past, they’ve also warned against the infamous Mirror Trading International scheme.

A Herd Mentality is Not Your Friend

Ever felt the pressure to jump on the latest trend? The FSCA wants you to resist that urge! In their latest announcement, they told investors, “Do not be pressured to go with the flow and do not be afraid of being left out of the ‘next big thing.’” Wise advice that applies to more than just cryptocurrencies.

Regulatory Actions Ahead

As if the situation wasn’t complicated enough, the FSCA is actively collaborating with the Intergovernmental Fintech Working Group to bring order to the chaos. With the FSCA classifying cryptocurrencies as financial products in December 2020, the groundwork for tighter regulations is being laid.

Tax Compliance and the Long Arm of SARS

Not only is the FSCA keeping an eye on crypto, but the South African Revenue Service (SARS) is also stepping up its game. They’re not just watching; they’re auditing. If you have crypto-related transactions, expect to answer some pointed questions on how you’ve handled your virtual coins.

The Crypto Questionaire

Similar to the notorious “crypto question” of the U.S. IRS, SARS is asking taxpayers why they bought virtual currencies and for specifics on their trading activities. The goal? To catch any crypto investors who might be dodging their tax obligations or misrepresenting the real value of their trading activities.

Final Thoughts: Be Smart with Your Crypto Investments

The cryptocurrency arena can be a wild ride, but armed with the right information and a willingness to dig deeper, you can steer clear of scams and stay on the right track. Remember, just because you see a crowd doesn’t mean you should follow it!