By: Damian Okonkwo
Well there is currently no existing ban on crypto currency trading in South Africa. There is no existing law currently proscribing anyone for trading crypto in South Africa. But the law has not declared it a legal one according to the constitution. However, given the tolerance given to it within the country, often it seems correct to assume that crypto currency trading is considered a legal business in the country. Nonetheless, the South African Reserve Bank (SARB) has issued warnings regarding the risks associated with trading in Bitcoin but has not placed any official ban on any form of cryptocurrency trading. SARS makes it clear that any earnings from these trades are subject to taxation. Cryptocurrency trading in South Africa is currently unregulated but the government is working on a new regulatory framework to control the cyber-banking industry.
Added to this, the South African Reserve Bank (SARB) has issued a formal statement that it “does not oversee, supervise or regulate the virtual currency landscape, systems and intermediaries for effectiveness, soundness, integrity or robustness” and has issued a warning highlighting the risks associated with investing in virtual currencies such as Bitcoin and Ethereum.
SARB notes that Bitcoin falls outside of the definition of a legal tender and any payments made via Bitcoin in South Africa “may not discharge a debtor of a monetary obligation and purchasers run the risk that their Bitcoin payments are not recognized by South African law”. In short, SARB deems transactions performed to be “at the end-users sole and independent risk and have no recourse to SARB”.
SARB further notes that Bitcoin and all other virtual currencies are “not defined as securities in terms of the Financial Markets Act, 2012 (Act no. 19 of 2012) and are not subject to regulatory standards that apply to the trading of securities”.
SARB also issues a warning that any profits made through Bitcoin transactions are subject to taxation.
Generally, South Africa seems to have adopted Bitcoin as an alternative currency on an impressive scale. Its believed to be largely due to the political and economic uncertainty in the country, where South Africans are looking for an alternative investment option to protect themselves. In particular, one that is not heavily regulated and can be transacted instantaneously.
In fact, Africa as a whole has taken a big interest in Bitcoin as well as other popular cryptocurrencies such as Ethereum and Litecoin. Nigeria and South Africa are ranked as first and second-most heaviest consumers of Bitcoin respectively. A study conducted by Luno revealed that South Africa leads many European countries in crypto adoption.
According to Lunos study, close to 70% of the South African respondents surveyed were aware of the digital currency trend and almost 30% had bought Bitcoin. This dwarfed awareness and purchase levels in other countries surveyed, such as Germany (49% and 9% respectively) and France (37% and 19% respectively).
How to buy Bitcoin In South Africa
You can buy and sell Bitcoin in South Africa through any reputable Bitcoin exchange simply using your personal computer or Smartphone using the relevant mobile app.
To do this you will first have to sign up for an account with the exchange and once it is verified, you need to obtain a Bitcoin wallet which you use for your Bitcoin transactions.
However, in order to discover the best exchanges to buy bitcoin from all South African traders are advised to visit Wikibit.com and download the app to get latest updates on their recommended and legitimate exchange for buying and selling bitcoin.
Is it possible to buy Bitcoin with a credit or debit card in South Africa？
Yes it is possible now to buy Bitcoin using a credit or debit card in South Africa. However, you still need to go through a reputable Bitcoin exchange such as Luno where you add your card details in the system and transfer money electronically once the card details have been verified. Credit card fees apply which makes it a slightly more expensive way to buy Bitcoin.
Regulations governing Bitcoin in South Africa
As of end 2019, strict regulatory laws governing cryptocurrency trading in South Africa were largely non-existent. This stands apart from tax regulations and AML/KYC compliance (AML meaning Anti-Money Laundering and KYC meaning Know Your Customer).
A consultation paper has been drafted by SARB that promises to enforce hefty regulations surrounding Bitcoin exchanges and BTM/VTMs but the country appears to still be a long way from nailing down the specifics. Its argued that a new regulatory framework will need to be developed as virtual currencies do not fit in with the current regulatory framework.