Reserve Bank closes ‘crypto Wild West’ in SA
Crypto-investors must remember that they must still report such transactions and must ensure that they comply with all tax requirements. Photo: Chesnot / Getty Images
BUSINESS
SA Reserve Bank will not interfere in future regulations regarding cryptocurrencies, because people are free to choose which assets they want to invest in. But people must be warned that they may lose their money because investing in cryptocurrencies is not the same as make a bank deposit.
Kuben Naidoo, a deputy governor of the Reserve Bank, said this week that new regulations on cryptocurrencies could be implemented in South Africa over the next 12 to 18 months to ensure the security of cryptocurrency platforms, to identify criminal activity such as money laundering and to contribute to protect investors.
Thomas Lobban, an expert on crypto-taxation at Tax Consulting SA, says South Africans should be relieved that the central bank does not ban cross-border crypto-trading and investment.
But crypto-investors must remember that they must still report such transactions and must ensure that they comply with all tax requirements, he said.
As part of PSG’s Think Big talk series, Naidoo emphasized that Reserve Bank did not want to interfere in investors’ cryptocurrencies.
He said:
Market movements fall outside the regulatory framework in a free market [economy] and investors are free to choose which assets they want to invest in. It is not our job to choose winners and losers, but to regulate, adequately protect crypto investors and warn about the risk of losing money due to the volatility of the crypto market.
Mirror Trading International (MTI), where thousands of people around the world lost billions of rands invested in cryptocurrencies before MTI collapsed, is one of the recent scams that has severely hurt consumers.
The US Commodity Futures Trading Commission recently sued MTI for $ 1.7 billion ($ 29 billion) in fraud over the “abuse” of bitcoin that investors bought, reports coindesk.com.
READ: Who are South Africa’s cryptocurrency investors?
Naidoo said the first step was to turn cryptocurrencies into a financial product for better tracking of possible money laundering, tax evasion and financing of terrorist activities.
According to Naidoo, many role players have suggested that stricter cryptocurrency regulation will help legalize the use of technology. The regulation is meant to separate the “good from the bad”.
He said the use of crypto for money laundering and other illegal activities was a cause for concern.
“About 90% of transactions in the United States, where payments are made with crypto, are for drugs or gambling where people want anonymity.
“Unfortunately, cybercriminals also use crypto to demand ransom and to fund cross-border kidnappings and international crimes.”
Lobban and Ruan Stander, a tax specialist on cryptocurrencies, say that if the regulations are implemented, everyone who offers advice or brokerage services on cryptocurrencies must be a recognized provider of financial services in accordance with the Financial and Brokerage Services Act.
“This includes South African platforms for cryptocurrencies, brokers and advisors.”
According to Lobban, this will officially be the end of the “crypto wild west” in South Africa.
According to Luno, the international crypto company established by two South Africans, around 300 million people worldwide used cryptocurrency in the first quarter of this year.
READ: Podcast | Inside a cryptocurrency scam
Luno now has 10 million customers in more than 40 countries. The last 1 million customers entered the field within six months, and more than 40% of them are in South Africa, said Marcus Swanepoel, CEO and co-founder.
Luno wants to put cryptocurrency in the hands of more than 1 billion people by 2030.
Marius Reitz, general manager of Luno in Africa, says South Africa and Nigeria are among their most important markets, and this shows how popular crypto is in emerging markets.
South Africans deposit an average of R480 when opening a Luno account, but can buy for as little as R1. A total of 82% of new customers who buy crypto choose bitcoin and 28% choose ethereum.
Merchants, a company that specializes in service delivery and consumer satisfaction, says a survey in the first quarter of this year showed that 53% of respondents had little or no knowledge of cryptocurrencies, only 14% thought they knew enough about the subject and the rest were largely neutral. but interest was high.
Matt Conn, head of revenue at Merchants, says more than half of those surveyed indicated that they would probably trust and invest more in cryptocurrencies if their existing bank offered them. Banks have an opportunity to get involved in the crypto environment soon, he says.
