Bitcoin Price Chart in South African Rand
Bitcoin Market Capitilization
Bitcoin in South Africa
The South African Government take a quite different approach to Bitcoin than most governments. Whereas those both pro and anti seek to regulate the use of Bitcoin and other crypto currencies, the S. African Government has taken the extraordinary step of deciding not to regulate them at all. In fact the South African Reserve Bank (Sarb) has issued a paper declaring that any virtual currency has “no legal status or regulatory framework” and so effectively falls outside the South African Reserve Bank Act 90 of 1989. The bank has advised that as Bitcoin has no legal status any legal issues relating to fraud cannot be substantiated. In other words it would be pointless to sue anyone for any infringements relating to buying, selling or trading Bitcoin and one does this wholly on ones own cognizance. The bank has further emphasised that it does not oversee, supervise or regulate cryptocurrencies so any transactions are performed at the end users risk. It considers that Bitcoin falls outside of the definition of legal tender and that bitcoin payments are not recognised by South African Law. In short they have washed their hands of it.
It also defines cryptocurrencies as not being Securities as per the Financial Markets Act 19 of 2012 and so are not subject to the regulatory standards of the act. Again the risk lies entirely with the end user who will have no come back in the event of a fraud, scam or loss of value.
With the Sars (South African Revenue Service) it is a slightly different story. According to Marcus Botha, the director, corporate tax consultant at the accounting firm BDO, Cryptocurrencies are not subject to the regulations of the Reserve Bank, as the position paper they released on virtual currencies states that the cryptocurrency does not have legal-tender status. “Until further clarity and formal regulation, Sars will apply general tax principles and tax the income or capital gains that are received or accrued to a taxpayer.” And Sars agrees, in a statement they said, “Transactions or speculation in Bitcoin is subject to the general principles of South African tax law and taxed accordingly,” Botha says that, “…… Bitcoin regarded as an asset and in your possession will have to be valued and included in your tax return at the end of the year of assessment.” He went on further, “If you use this asset to transact, the transaction may be regarded as a barter transaction or trading stock. In such a case, VAT on barter transactions should be considered.”
He also pointed out that holding this asset as an investment can incur capital gains tax (CGT) when the asset is disposed of. “For both income tax and CGT purposes, the rand value amounts will need to be included in the gross income of the taxpayer. Therefore, exchange differences may have to be considered on conversion of the asset’s value using the relevant exchange rates.” He stated.
Of course this is not going to influence Bitcoin enthusiasts who see it as both a more stable currency than the Rand and a potential profitable investment.
Sars is at odds with Sarb in that although it is not regarded as a currency or an asset per sec, Sars still wants to rake of something from the top AS IF it were a currency or asset. Sars has mandated that a taxpayer who receives cryptocurrency as payment for services should include, in computing gross income, the fair market value of the cryptocurrency and such income is subject to normal tax. Also that cryptocurrency received by an independent contractor for performing services constitutes self- employment income, and as such is subject to normal tax and you may be liable to register as a provisional taxpayer if the total taxable income received exceeds the tax threshold for the year.
According to sources at Personal Finance in Cape Town, ‘Jonathan Purnell, an associate designate in the tax team at Norton Rose Fulbright South Africa, says that, when Bitcoin is bought on an exchange, the value of the Bitcoin – the rand price at the time of acquisition – must be recorded and that when that Bitcoin is used to purchase goods or sold for Rands, tax – at your marginal rate – will be applied to the amount by which the disposal value exceeds the acquisition value. In relation to the purchase of goods, the disposal value would be the market value of the goods acquired.’
“If you receive Bitcoin as payment for providing goods or services, the full rand value of that Bitcoin at the time of receipt will be subject to tax at your marginal rate as if you had received an asset in consideration for the goods or services in question.”
For the undeterred, you can buy Bitcoin in South Africa from a number of exchanges. Examples are Ice Cubed, and Luno who will both accept a deposit from your bank account, and you can purchase and trade Bitcoins once the funds have cleared. Ice Cubed exchange allows users to buy and trade in a limited number of other cryptocurrencies, such as Ethereum and Litecoin. Luno exchange at the time of writing only offers Bitcoin and Ethereum. However in total there are around eleven exchanges in S.A and one can also seek offshore exchanges of course plus there are always the peer to peer networks such as localbitcoins.co.za. With some exchanges it is possible to buy Bitcoins with PayPal (using the VirWox exchange to first purchase Linden $, a currency in the game Second Life) and even credit card, although how long that will last with the concerted effort to curb the purchase of Bitcoin with credit card worldwide, is anyone’s guess. However there is still a way by going to CEX.IO following the prompts, registering your card and using their system to buy Bitcoin.
S.A falls into the category of one of the easier places to buy Bitcoin and once you have Bitcoin of course to can transfer it to any wallet you wish. It is recommended you have an offline cold wallet to transfer it to once you have made your purchase and it is then available to keep or spend anywhere in the world.
This article is for information purposes only and is not to be construed as financial information for any purposes such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.