South African FSCA Updates Stance on Karatbars

A little more than a month ago, the Financial Sector Conduct Authority (FSCA) in South Africa and the Financial Supervisory Authority in Germany (BaFin) both placed regulatory pressure on the Karatbars ecosystem, advising consumers to be wary of engaging with the project.

In a press release from 13 December, the FSCA has updated its stance on the project, basically clarifying a couple of details on the matter:

• Karatbars International GmbH presented to the FSCA the two products it markets in South Africa – the sale of gold bullion and the sale of a digital asset to be launched.
• Neither of the two products can be defined as a financial product or service, thus none of them are registered with the FSCA and fall outside of their jurisdiction.

The government agency continues on to warn the public to make informed decisions before engaging with the emerging digital asset markets:

“The FSCA continues to caution the public that these kinds of transactions are high-risk and that it is unable to ascertain the ability of the companies involved in these kinds of transactions to honour their commitments or financial obligations to clients. Given this, the public will have no recourse, protection or assurance by the FSCA relating to these transactions which are styled in some cases as investment purchases.”

At the end of the press release, the FSCA also cautions consumers to make sure they deal with the Karatbars ecosystem responsibly, making sure that they are engaging in a deal that is obligatory on both sides.

The FSCA’s main worry is that there is no certainty that purchased assets will be handed over to consumers at a promised future date.

Compared to their previous statement on Karatbars, the FSCA has loosened the rope around the ecosystem’s neck quite a bit, giving the project the benefit of the doubt while still warning investors to keep a level head when dealing with the uncertainty and risk of digital asset markets.

The Karatbars team took to Twitter to share the latest FSCA press release, announcing that “the truth always wins”.

Closing on a friendly advice to the Karatbars team, unless I am unaware of some friendly inner-circle banter, don’t misspell the brand name of your project and if you are bent on misspelling “community”, there’s better ways to do it.