The world’s biggest crypto scam in 2020 – MTI – reportedly South Africa’s home-bred crypto scam has forced regulators to initiate strong action. However, the downside of it is that it is churning out some of the very good crypto firms out of the country to find safe havens elsewhere.
South Africa’s burgeoning crypto exchanges are now moving to other crypto-friendly destinations and financial hubs like Singapore. Besides, an optimistic outlook put forward by the U.K. government to embrace digital currencies is luring crypto firms to the European nation.
As Bloomberg reports, the burden of high regulatory oversight has forced crypto exchanges to move their HQs abroad to other safe-havens. South Africa’s largest crypto trading platform Luno already has moved to London along with a presence in Singapore.
Cape Town-based Revix specializing in offering bundles of digital coins is shifting its head office to the U.K. In an interview with Bloomberg, Revix Chief Executive Officer Sean Sanders said:
South African authorities “have been incredibly slow in terms of regulation in the industry and that leads to businesses looking internationally. In an unregulated environment, a customer arrives at our platform with skepticism, and rightfully so. South Africa seems to go in the opposite direction of some of the more developed market pioneers and innovators in this space”.
South Africa’s Sad History of Pyramid and Ponzi schemes
In a down-turning event for the crypto industry, Mirror Trading Investments (MIT) turned out to be the biggest crypto scam of 2020 as reported by Chainalysis. The scam wiped out $1.2 billion worth of investors’ money. Earle Loxton, CEO of Digital Currency Index said:
“South Africa has a sad history of pyramid and Ponzi schemes and crypto was the obvious new format for this. Honest operators welcome regulation as it makes it possible for their clients to invest with confidence, especially at institutional level.”
It looks like the foremost priority for regulators at this point is offering the highest security to investors. Although it might be a bit frustrating to investors, the good thing is that the industry and regulators are working together on the proposals.
Even the top banks from South Africa have backed regulatory efforts for developing the framework for crypto assets. But the uncertainty in crypto regulations is making exchanges and investors nervous.
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