Crypto Assets now regulated financial products in South Africa

Crypto assets are finally being included as financial products in South Africa, according to a recent notice from the Financial Sector Conduct Authority. This change brings crypto assets into the scope of the regulators which will benefit customers by providing the same level of oversight for crypto assets as any other financial product offered by registered financial service providers.

The notice defines a crypto asset as a “digital representation of value” that is not issued by a central bank but can be traded, transferred or stored electronically by natural or legal persons for the purpose of payment, investment and other forms of utility. The notice takes effect immediately and falls under the Financial Advisory and Intermediary Services Act. With this introduction, South Africa becomes one of the leading countries to embrace cryptocurrencies, unlocking immediate benefits and potential across the financial services industry.

According to a recent survey by Pet Rock Investments, advisors see crypto being a key part of future planning in the next 12 months, with 72% of advisors already planning to allocate crypto in client accounts. “Financial advisors are looking for exposure to this asset class but are fundamentally concerned with its volatility and inherent technical risks, especially custody,” says Paul Casarin, Chief Executive Officer of Pet Rock Investments. “Regulations will provide the level of trust the market needs - especially this year. However, advisors see other risks which are paramount to understand before allocating any crypto to an investment portfolio.”

According to the findings of The Pet Rock Investments 2022 Benchmark Survey of Financial Advisor Attitudes Toward Crypto Assets, Clients are buying crypto en masse without asking their advisors: Up to two-thirds of clients (66%) are investing in crypto on their own. With regulation, this introduces an entirely different dynamic between advisors and their clients. There is now a clear gap to fill between client expectations and their willingness to invest in crypto and advisors who need to support and service their clients.

To assist advisors and crypto investors, Pet Rock Investments offer a free Investor toolkit to assist with fund allocation and other key aspects to consider before investing. The free investor toolkit is available on the website, petrockinvest.com.