Is it legal to Buy and Invest Bitcoin in South Africa
Is Bitcoin Legal In South Africa
Bitcoin and other cryptocurrencies are all the rage in current times. Thanks to the incredible gains that these have provided to the investors as well as their promise of a better financial system in the future, they have skyrocketed in popularity throughout the world.
In South Africa, bitcoin is seen as a really good alternative investment due to the uncertain political and economic scenario in the country. South Africans believe that this will protect the value that they possess. This has made the South Africa bitcoin industry flourish in recent times.
But as with all other countries, bitcoin and cryptocurrencies were often seen as a controversial topic. Therefore, there is still a need for clarity about them.
What is Bitcoin?
On October 31, 2008, an anonymous individual or a group of individuals, with the pseudonym Satoshi Nakamoto, published the whitepaper for Bitcoin online. In it, bitcoin was described as a peer to peer electronic cash system, based on blockchain technology. Less than three months later, on January 3, 2009, the bitcoin blockchain went live.
It’s been over a decade and the identity of Satoshi Nakamoto still remains a mystery. Bitcoin, however, has exploded into popularity, and most people today have at least heard about it, even if they haven’t directly used it.
Is Bitcoin Legal In South Africa?
The short answer is yes. You are free to buy bitcoin in South Africa, sell bitcoin and get involved in other capacities as well. If the activities concerned are legal, then their use is legal as well. The official status of the cryptocurrency industry in South Africa, from a regulatory standpoint, is that it is not a regulated industry.
This doesn’t mean that they are illegal or banned. It’s just that there are no specific rules for crypto at the moment. That’s why investors who get involved in crypto in South Africa, apply existing laws to determine their liability regarding taxation and such.
What Does South Africa’s Central Bank Say?
In the past many years, the South African Reserve Bank (SARB) has maintained the same stance on bitcoin and other cryptocurrencies. They have repeatedly warned investors that “Bitcoin has no legal status or a regulatory framework. Thus it poses a number of risks for those that would choose to transact with it such as the lack of guarantee of security, convertibility or value.”
The South Africa central bank has also issued an official statement that it “ does not oversee, supervise or regulate the VC landscape, systems or intermediaries for effectiveness, soundness, integrity or robustness. Consequently, any and all activities related to the acquisition, trading or use of VCs (particularly DCVCs) are performed at the end-user’s sole and independent risk and have no recourse to the Bank.”
The central bank has also stated that Bitcoin and other cryptos are not considered as securities according to the relevant laws and are, therefore, not subject to regulatory standards that apply to the trading of securities. It also noted that any profits made through bitcoin transactions are subject to taxation.
The National Treasury has also advised retail investors to be extremely cautious of both the risks and the benefits associated with dealing in cryptocurrencies in any manner whatsoever.
Of course, this doesn’t mean that bitcoin or crypto, in general, is banned. People are still free to use these as per their will. The only thing they need to be aware of is that the industry is volatile as it is still nascent and there are no specific rules and regulations regarding crypto.
Regulatory Clarity Moving Forward
The lack of regulatory clarity surrounding cryptocurrencies in South Africa may not last for too long now. The South Africa Reserve Bank has communicated that it wishes to introduce new laws that will govern the use of cryptocurrencies in the country. These laws will be specifically tailor-made for bitcoin and other cryptos so that there is no space for ambiguity.
However, it seems like the central bank will need one more year to finalize all the details, as reports have stated that the new regulations will come in place in early 2021. Till that time, investors are supposed to look towards existing laws and apply them to their situation and needs to the best of their ability.
In more revelatory news, the latest reports state that SARB deputy governor Kuben Naidoo has said that the upcoming rules will bring the 5-year-long consultation period on the topic of digital assets to an end. This shows that the central bank was keenly and closely monitoring the crypto space to come up with ways to regulate it.
Although some rumours had earlier stated that the central bank might come up with a heavy-handed set of regulations, it is now believed that SARB will merely ensure that cryptos are not used for illegal activities and that users do not evade taxes. They could also limit the amount of cryptocurrency that South Africans send outside of the currency. This will be like the limitations that fiat has currently in place all around the globe.
Banking Access To Improve?
In South Africa, the crypto industry has had a somewhat rough relationship with the banking sector. This has been almost a common theme between several other countries as well. In South Africa, local banks have been getting sterner with users of cryptocurrencies. One of the five largest banks in the country went as far as closing the accounts of all the companies that were dealing in cryptos.
They stated that they took this action because of the risks associated with dealing in cryptocurrencies by these types of corporations. One of the South Africa cryptocurrency exchange was greatly affected due to this move. It seems, however, that bank accounts of individual crypto investors haven’t been closed down.
The upcoming regulations should improve banking access to the entire crypto industry as a whole. This will make them even more accessible than they currently are. It is clear that South Africans want to invest in bitcoin and other cryptos as search trends of “how to buy bitcoin South Africa” are on the rise for the longest of times. They’re just waiting for laws to become clearer.
Is it legal to Buy and Invest Bitcoin in South Africa