regulations by South Africa

The South African Reserve Service has been considering altering their tax return forms in order to include cryptocurrencies. SARS and the South African government recently made a regulatory working group for cryptocurrency assets in order to investigate the true potential of cryptocurrencies and blockchain technologies. 

An Official Response to Cryptocurrencies

This new regulatory working group includes representatives from many different traditional finance industries. The South African government devised a team with people from; the Financial Intelligence Centre, the South African Reserve Bank (SARB), the Treasury, and the Financial Sector Conduct Authority. This group aims to help the South African government to both appropriately and officially respond to cryptocurrencies. This will allow them to develop a “unified intergovernmental regulatory framework” according to finance minister Tito Mboweni.

It is anticipated that, following broad industry comment and participation, the crypto assets regulatory working group will be ready to release a final research paper on the subject during the course of 2019,

Back in May 2018

it was reported that around 47% of South African citizens have plans on investing in cryptocurrency. Figures like these are easily large enough to kickstart the establishment of a unified regulatory infrastructure made for dealing with these investments. As a result, Mboweni states that SARS is currently discussing making amendments to their existing tax return forms in order to include cryptocurrencies in 2019. The reason for this is because the current forms make it hard for SARS to accurately keep track of declarations. Especially the ones that concern profits made in the crypto space. However, cryptocurrency would be subject to the same tax regulations as other currencies. Mboweni added:

Taxpayers who have made some form of declarations regarding cryptocurrency trades have captured such trade as a form of ‘other trade income’ or ‘other trade loss’, and have made reference to a description of digital/cryptocurrency trading (e.g. Bitcoin Cash, Litecoin (LTC), Ethereum (ETH), Zcash (ZEC) to name a few).

The State of Cryptocurrency Regulation in Africa

iCE3X is a self-regulated, ethical and responsible fiat to crypto exchange. We were invited and attended the Crypto Assets and Regulatory Working Group in November 2018. We’re staying close to the policy proposals and actively participate in consultation on policy with this group. We are pleased at the recognition and attention to this new asset class. We believe 2019 will be a watershed year for cryptocurrencies – Eugéne Etsebeth, iCE3X COO

Cryptocurrency has been booming in Africa, with the African audience at the highest it’s ever been. However, we could see many African countries imposing their own cryptocurrency regulations throughout 2019 in response to the wave of cryptocurrency interest in Africa. Many African countries (Including South Africa) are a part of the Financial Action Task Force (FATF). A group of 37 countries, all planning to formulate governing guidelines and rules in order to govern cryptocurrency exchanges. In essence, it will ensure that effective countermeasures are implemented in order to prevent illegal activities such as funding terrorists and money laundering.

Since 2018

there has been a selection of new regulations regarding cryptocurrency in Africa:

  • March 2018 – The Central Bank of Kenya warned the public about risks involved with investing in Bitcoin and altcoins
  • May 2018 – the South African Reserve Bank (SARB) declared digital currencies as ‘cyber tokens’
  • January 2019 – The South African Revenue Service works toward amending their tax return forms in order to add cryptocurrencies.
  • January 2019 – the Capital Markets Authority (CMA) warns the public about KeniCoin, as well as subsequent cryptocurrency trading in Kenya

Taxpayers who have made some form of declarations regarding cryptocurrency trades have captured such trade as a form of ‘other trade income’ or ‘other trade loss’, and have made reference to a description of digital/cryptocurrency trading (e.g. Bitcoin Cash, Litecoin (LTC), Ethereum (ETH), Zcash (ZEC) to name a few).

Conclusion

Crypto regulation isn’t always a bad thing. While at times it can mean a country will ban cryptocurrency outright, most of the time it is regulated just so it’s able to be taxed. Cryptocurrency is a powerful innovation, and for developing countries, it can provide a better option than their own fiat currency. For example, in Venezuela, people are suffering from a +1 Million% inflation rate. At that point, using a cryptocurrency would be a more reliable option for the country.

The South African government has been looking into cryptocurrencies for a while now. With SARS looking into bitcoin and cryptocurrency trades back in September 2018; and SARB giving crypto regulatory certainty in December 2018, things are looking up for the crypto space.

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Disclaimer Notice:

This article is intended to educate and should in no way be seen as investment advice or an enticement to use the ice3x.com platform. Bitcoin is highly volatile with big profit opportunities but you should also remember that you could lose part or all of your investment whenever you take part in any high risk investment. Bitcoin trading is not a regulated industry in South Africa, which in itself carries additional risks. IF YOU ARE NOT AN ASTUTE BITCOIN TRADER, SEEK INDEPENDENT FINANCIAL ADVICE BEFORE MAKING ANY INVESTMENTS.