Buying and selling cryptocurrency in South Africa is legal but it is currently not regulated.
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 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 recognised by South African law”. In short, SARB deems transactions performed to be “at the end-user’s 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.
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. It’s argued that a new regulatory framework will need to be developed as virtual currencies do not fit in with the current regulatory framework.
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