Cryptocurrency is gaining speed in South Africa, as the government made it clear in its 2022 Budget Speech that it is taking it very seriously, says Tax Consulting SA.
In the Budget Review 2022, the government established its cards on the table by proposing that regulatory bodies safeguard the crypto owner, the firm said.
Tax Consulting SA said that the first and second interventions require a regulatory body to regulate cryptocurrency in South Africa.
“These interventions focus on the individuals and companies who “trade” on the market with clients’ crypto assets and then vanish with the money,” the company noted.
Individuals and companies must register with the Financial Sector Conduct Authority (FSCA) and stick to their requirements.
In parallel, it is conveyed that the government wants to boost its monitoring of crypto users that use South African businesses to send crypto assets to an international exchange like Binance and similar markets.
Tax Consulting SA highlights that this method is employed for two reasons:
-The South African interactions do not present all the crypto trading teams that international exchanges like Binance offer, while crypto users participate in trading.
Arbitrage trading means that users buy crypto internationally – where it’s usually more affordable – then send it to their South African exchange, sold in the country for a higher premium price since South African prices are typically higher than international ones.
Crypto-owners have an R1-million discretionary allowance per financial year which permits them to send money/crypto overseas with no approval from the South African Reserve Bank (SARB).
“This ruling is desired at individuals sending more than R1 million and not obtaining the necessary approval from the SARB.”
The government took into consideration the interventions by the Intergovernmental Fintech Working Group (“IFWG”) define some measures, including Crypto aid service providers as responsible institutions within the Financial Intelligence Centre Act (2001). This change would handle terror risk financing through crypto-assets and money laundering as well as align the act to the standards set by the FATF for virtual assets and related service providers. Those proposed modifications to the show were published in June 2020 for public consultation and are expected to be finalized in 2022.
In addition, crypto owners see these proposed interventions as a proactive approach from the government to protect the consumer and South African fiscus, said Tax Consulting SA.
“South Africa witnessed an increase in cryptocurrency heist, and the demand for implementing the law increased on the government’s plan. This process pursues high-profile cases where company founders allegedly stole billions of rands in crypto assets from South African crypto owners,” he added.
With cryptocurrency being combustible and rules not being imposed yet, the crypto owner must be supplied with the correct information to protect their investments from theft.
Last but not least, If companies are offering customers five percent growth per day, it is a bad sign, and something is not going according to plan. Even if companies are offering one percent to two percent growth per day, it should be scrutinized, given that such growth in cryptocurrency is hard to achieve.