The head of investigations and enforcement at South Africa’s FSCA (Financial Services Conduct Authority), Brandon Topham, came out on Wednesday morning with some strong criticism for the cryptoasset industry.
Speaking at an FSCA media briefing, Topham said “in my opinion anything to do with crypto is highly suspect and nobody should be invested in any form of cryptocurrency or any of the products that go with it.”
The statement comes off the back of severe allegations and investigations targeted toward Mirror Trading International (MTI), with the FSCA publishing a warning of the scheme less than two weeks ago.
While the FSCA executive did acknowledge that the regulatory body were indeed working with a number of compliant players in the industry, his fairly flippant remarks about the apparent sinister nature of cryptoassets forced VALR CEO Farzam Ehsani to show his hand.
Ehsani has long been a proponent of partnering with regulators in order to provide a safe environment for customers, but these recent statements from a high ranking FSCA official have clearly provoked the CEO to speak out.
In an open letter published on his blog, the CEO directly addresses the Chairperson of South Africa’s Intergovernmental Fintech Working Group (IFWG), Dr. Arif Ismail.
Ehsani notes his and other’s work in assisting the IFWG in formulating a regulatory framework around cryptoassets, but raises strong contention with Topham’s recent comments.
“The comments made by Mr. Topham are at odds with the spirit and content of the constructive discussions the crypto industry has had with South African regulators to date,” the letter says, requesting Dr. Ismail provide clarity on whether Topham’s comments are personal or representative of the FSCA. (It is worth noting, Topham’s quoted statement does open with the caveat “in my opinion”.)
While acknowledging the presence of scams in the industry, Ehsani highlights the reality that bad actors are prevalent in all markets, from property to automotive, and even conspicuously underlining their presence in the market of the biggest currency in the world; the US Dollar…
“Of course there are scams in the crypto space, as there are in online commerce, property, the vehicle market, the dollar, the rand and virtually every other realm of economic activity,” Ehsani writes, “This is unfortunate. But it is important to differentiate between a tool and the use of that tool by criminals and fraudsters. Emerging technologies, including the internet, have often been used by criminals first. This doesn’t mean that we should lose sight of what these powerful technologies can do to promote the welfare of society.”
The VALR CEO concludes his letter by emphasising his and his team’s commitment to partnering with regulators in building a safe framework for the crypto industry in South Africa. Read the entire open letter here.
At the time of writing, a response from the FSCA or the IFWG has not been received.