While the population of cryptocurrency in South Africa has soared in recent years and the past few months in particular, the South African Revenue Service (SARS) is seemingly beginning to play hardball when it comes to outstanding tax liability.
The FSCA confirms that it is aware of the concerns regarding investments made by the public in Africrypt (Pty) Ltd. and that it is continuing to investigate complaints for indications of whether or not a financial product or service was offered to the public, which would have required Africrypt to be registered with the Authority.
Bitcoin and other cryptocurrencies have experienced a major sell-off this week following China’s crackdown on the sector, but the “crypto haters” are wrong to dismiss the digital assets, according to Nigel Green, chief executive and founder of deVere Group.
The Intergovernmental Fintech Working Group (IFWG) has today, through the Crypto Assets Regulatory Working Group (CAR WG), published a position paper on crypto assets. The paper confirms that crypto assets will be brought into the South African regulatory purview in a phased and structured manner.
It has been more than three years since SARS’s media statement on cryptocurrencies. In this statement, SARS said that it would apply “normal income tax rules” to cryptocurrencies when assessing whether a gain is revenue or capital in nature, and that crypto assets are not seen as currency for income tax purposes.
Along with the rest of the world, South Africans have shown an appetite for cryptocurrencies. While the size of the market remains unclear, Coinmarketcap gives a figure of $210 billion for the global market, and approximately R6.5 billion for the South African market.
There are many marketplaces called “bitcoin exchanges” that allow people to buy or sell Bitcoins using different fiat and cryptocurrencies via mobile apps. These exchanges are more relevant for individual or retail investors purchasing up to R1m wort of digital assets. Bitstamp, Coinbase and Kraken are leading global exchanges while Luno and Valr are the two leading South African based bitcoin exchanges.
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