Guide to key things to do when trading or operating Bitcoin and other cryptocurrencies in South Africa, as well as a summary of the country’s advances in blockchain.
South Africa, known for its diversity of cultures, languages and religious beliefs, deserves the nickname “The Rainbow Nation”It is also one of the countries with the highest number of Cryptocurrency users. According to a study from last year, 10% of the country’s internet users have a digital currency. This is not surprising since South Africa is the second most important country Bitcoin based on search data from Google Trends.
It is also the only country in sub-Saharan Africa that has an internet penetration rate of over 50%. Interestingly, South Africa also tops the list of countries with the highest social inequalities. This indicates that many of the residents who are not using the Internet may not have the resources to access this service.
Following the growing trend of the population towards digital currencies, the local government has also expressed great interest in the assets and potential of Blockchain. In this issue of «All About Bitcoin …»We will give an overview of the use of cryptocurrencies in South Africa, taking into account legal, social, economic and political aspects to answer questions on this topic.
In South Africa, digital assets are not subject to national laws and there is therefore no specific legal framework. While using cryptocurrencies it is not forbidden, You are in a “gray area” when it comes to legality.
The growing interest of the people of the African country in digital currencies has prompted the authorities to consider creating a legal framework for the area. And for some years now, the local authorities have expressed their intention to regulate the sector. In 2016 the country created the South African Intergovernmental Fintech Working Group (IFWG). And in 2018 the Regulatory Working Group on Intergovernmental Cryptographic Assets.
This year the groups consisting of The Reserve Bank of South Africa, the Financial Sector Conduct Authority and the National Treasury and other authorities issued one document with recommendations for creating a legal framework for cryptocurrencies.
Although no official bill has yet been published, the document suggests that the authorities will soon enforce strict financial regulations. In what will serve as a legal roadmap, regulators they recommended the cryptocurrency “remain without legal tender“” They also suggested that cryptographic service providers comply with the FATF rules. B. Customer identification (KYC) and reporting suspicious activity to authorities.
The issuance of financial products and the provision of financial services are regulated by various laws as defined in Law 9 of the 2017 Financial Sector Ordinance (FSRA). In this way, the application of some of these regulations can be extended to services of the crypto ecosystem, think, exchange, wallets, ATMs and token issuers, among others.
A recent bill is intended to clarify existing provisions on digital assets in tax law.to South Africa. While “Bitcoin is not a currency for South African purposes“The South African Revenue Service (SARS) Apply normal tax rules to cryptocurrencies.
Transactions or speculations with digital currencies are subject to the general principles of South African tax law and are taxed accordingly. SARS therefore expects taxpayers to report gains or losses on digital assets as part of their taxable income. Otherwise, fines can be imposed as set out in a SARS report for 2018.
Depending on the circumstances of the individual case, a capital gains tax or a normal tax may be levied. For example, when a resident receives Bitcoin As a payment for a service or work performed, this profit may be subject to normal tax. If instead using Bitcoin Income tax may be levied for investment purposes.
Cryptocurrency mining in South Africa
Just like the legal situation in which digital assets are located in South Africa, cryptocurrency mining is not regulated by law. Given SARS, mining assets like Bitcoin It is an activity whose income is subject to normal tax.
At the level of the African continent, South Africa is the main country where crypto mining operations are carried out. It should be noted, however, that Africa is less than 10% of the total rate Hash from Bitcoin. So it’s not a very popular activity in the country.
While South Africans also pay relatively lower electricity tariffs compared to other African countries, a study from 2018 found that mining a Bitcoin in South Africa it costs USD $ 5,948. These high electricity prices, mining equipment prices and tax regulations could be some of the reasons why this activity is not gaining popularity in the region.
Add to this the tropical and dry climate, which characterizes certain areas of the country as one of the reasons for the scarce mining. On the other hand, for users who can afford this activity, the upcoming reduction in rewards, though Halve from Bitcoin and strict government regulations could be imposed in the near future as an obstacle to the accomplishment of this activity.
The most popular cryptocurrencies
Cryptocurrencies are very popular in South Africa. In fact, interest is growing Bitcoin in the population a phenomenon that is confirmed by data from Google Trends. To Nigeria South Africa is the country with the highest number of searches for the term “Bitcoin“; Classification, which in turn corresponds to that of the two main economies in Africa.
As in many countries, the most popular currencies are those that have the greatest commercial reputation in the market, which in this context means assets such as Bitcoin (BTC) and ether (ETH). Other popular cryptocurrencies in the country according to the main ones exchange are, Ripple (XRP), Bitcoin cash (BCH), Dash (DASH), Cardano (ADA), Litecoin (LTC), Bitcoin SV (BSV) among others.
Some analysts have highlighted that economic reasons are responsible for growing interest in cryptocurrencies. Although South Africa is one of the region’s economic leaders, the country accumulates substantial public debt with a high unemployment rate of around 29%.
Operative exchange in South Africa
Depending on the medium BuyBitcoinWorldwideTrade in Bitcoin In South Africa, it started to increase in March 2017 when the country’s finance minister had to resign in controversial circumstances. This year the investment platform eToro Asset trading increased massively by 671%. While in LocalBitcoins Local users exchanged a record high of $ 1.6 million.
From 2018, however, with the fall in prices of Bitcoin and with the beginning of government enforcement, trade lost strength. Even so, there are a significant number of people in the country who trade digital currencies.
According to the general manager of Luno, the country’s main stock exchange, averaged R 90 million (USD 4.8 million) in Bitcoin It is marketed daily in South Africa. And just last week, USD 940,000 was exchanged in local currency, which corresponds to BTC 109 on the P2P platform. LocalBitcoins.
later Luno, ICE3X, VALR and AltCoinTrader are some of the exchange are the most popular in the country. Also peer-to-peer exchange platforms LocalBitcoins y Paxful They are also options for local users. In February this year Binanceannounced its entry with the integration of the South African Rand (ZAR). Also Safcoin Recently, entry into the local crypto market was announced.
It should be noted that last year First national bank (FNB), one of the “Big Five” South African banks have announced the closure of several cryptocurrency exchanges that offer services in the country. The institution noted that the reasons for the decision on the “potential risksConnected to these platforms. A January report suggests that another large bank in the country, Nedbankcould follow the initiative of the FNB against the exchange.
Under the options to buy and sell Bitcoin and other crypto assets are also counted as ATMs. There are a total of seven ATMs in South Africa CoinATMRadar. Three in Cape Town, two in Pretoria, the country’s capital, one in Johannesburg and one in Nelspruit.
Commercial takeover of Bitcoin
According to data from Coinmap.org, South Africa has some companies that contain assets like Bitcoin under its payment mechanisms. Most focus on the south of the country and between the capitals. Johannesburg has around 15 merchants that accept cryptocurrencies, while Cape Town has just over 30.
An analysis of the companies listed on the card shows that various items and services include digital currencies in their payment alternatives. Bars, cafes, restaurants, shops, transportation services, jewelry stores, hotels and tourism are some of the services.
Was found among them Spada diamonds, a Cape Town jewelry store that accepts payments in Bitcoin offers a specific catalog of recycled parts and is called “ethical and sustainable jewelry“” The family theater and the bar also attracted attention. The Hofspielhaus.
In this line a list of companies that accept Bitcoin in South Africa funded by the Exchange Luno, listed more than 200 services and retailers in 2017. The list is diverse and includes everything from shops and grocery stores to nonprofits and digital services.
In addition to the enthusiasm of the South African population for digital currencies, the country has also made significant technological advances Blockchain. Until recently, most of the growth was in Blockchain focuses on the financial sector, but other initiatives are beginning to emerge.
The project The sun exchangeThe company, launched in 2015, enables the monetization of sunlight, one of the continent’s most abundant resources. More recently, a team of scientists from the University of Cape Town in South Africa developed an application using COVID-19 tracking technology.
In 2018, the Reserve Bank of South Africa tested the technology with the participation of the country’s leading commercial banks Blockchain with successful results. Likewise in the past year South Africa, together with the other countries from which the BRICSdiscussed the development of a digital currency to facilitate trade and reduce US dollar dependency.
This year, government officials stressed that technologies like Blockchain They could help lower the national unemployment rate. Announcement consistent with the efforts of the Office of Digital Advantages, which is actively looking for projects Blockchain Nationals to support them.
During this year, authorities tightened regulations for the crypto industry and BlockchainRecent declarations suggested that the government could take a more flexible approach to stimulate the growth of this business sector. In a February 2020 State Budget speech, Finance Minister Tito Mboweni said: “South Africa is approaching the fourth industrial revolution. “.
We are determined not to be left behind. We are relaxing the rules to help our emerging fintech sector.
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Article by Hannah Estefanía Pérez / DailyBitcoin
Image by Sharon Ang from Pixabay