Legality And Regulation Of Bitcoin And Other Cryptocurrencies In South Africa
South African Reserve Bank
From a recent report, it is evident that South African Reserve Bank will be trying out cryptocurrency regulations. The chief executive officer of Bankymoon in the person of Lorien Gamaroff has confirmed the deal. Gamaroff continued by saying that his company has been chosen as the premier service to try out cryptocurrency regulations in South Africa. Among the advanced economies to embrace the development of crypto regulations, SA has been found lagging in the entire process. At the moment, South Africa is on the path to creating a system that regulates the operation of cryptocurrencies and bitcoins. In discussing the framework of the process, Lorien has provided the SARB the sandbox to get started according to the announcement of the South African government.
Does South Africa Consider Bitcoin As A Legal Currency?
Bitcoin is considered a legal currency in South Africa. Provided you are involved in an authorized activity with bitcoin, it is considered legal. In South Africa, cryptocurrency remains unregulated. In time past, the South African Reserve Bank has signaled a warning about using bitcoin. This is because the cryptocurrency has no regulatory framework or legal status in the country. On this note, people who are transacting business in the form of bitcoin will face tons of risks. This can be lack of value for the currency, convertibility, and guarantee of security.
In terms of the Financial Markets Act, 2012, virtual currencies aren’t considered as securities. The Act no.19 of 1989 regulation confirms that bitcoin is yet to enter the league of other currencies in the financial markets. This implies that cryptocurrencies will not be subjugated to the normal rules that are used for trading securities. In most nations across the globe, bitcoin is widely unregulated and legal. With respect to taxation of virtual currencies, many nations have established regulations to follow.
It is the duty of the SARB to control the management of currency according to the Act no.90 of 1989. The South African Reserve Bank also has the authority to issue notes, coins and much more. In a nutshell, the SARB has the authority on Legal Tender. When talking about legal tender, bitcoin does not fit into this category. Purchasers run the risk that bitcoin transactions are not recognized by South African monetary regulations. This is because bitcoin may not discharge a debtor of a monetary obligation in South Africa. There is every possibility for merchants to reject any form of bitcoin as a method of payment.
The South African Reserve Bank mentions that it doesn’t regulate, supervise or oversee the virtual currency platform, intermediaries or system for integrity, soundness, effectiveness or robustness. The SARB also continues by saying that all and any activities associated with the trading, acquisition or use of virtual currencies are done at the discretion and danger of the user. It will definitely not have any recourse to the bank.
South Africa Bitcoin Tax:
In South Africa, bitcoin is not currently taxable. The SARB mentions that speculation or transactions in bitcoin and cryptocurrencies are done to the overall rules of South Africa tax regulations. The process also includes any income emanating from trading or performing transactions on cryptocurrency. For bitcoin-to-rand payments, the SARB has not provided any tax regulations. SARB also unequivocally states that it will not accept transactions in bitcoin.
The same taxes will apply when exchanging bitcoin for rand. This can qualify as income for active traders or cause a capital gain. In terms of tax, all assets are handled fairly. When it comes to blockchain technology, the South African regulator remains one of the more progressive across the globe.
It is a good idea to sell high and buy low when actively trading bitcoin in South Africa. Since it is a stock, users will be definitely charged on using bitcoin in South Africa. This is because it involves losses and profits. If you are buying bitcoin in South Africa, then the scenario is the same. Since it will also lead to losses and gains, you’ll be eventually taxed as a capital. When dealing with bitcoin in South Africa, it is important to know that your intention matters a lot. Bitcoin is legal in South Africa, but regulations guiding it are yet to take effect. For more information, you can consult a financial expert to guide your steps while using bitcoin in South Africa.