Business 30 November 2018Dennis Wafula
Crypto in Africa: Nigerian politician vows support as Uganda seeks crypto regulatory framework
It’s an interesting week for the cryptocurrency space in Africa this week. The continent has seen more governments profess their support for cryptocurrencies publicly, while others are planning to create a regulatory framework for the market.
Nigeria opposition leader promises to support blockchain, cryptos
Atiku Abubakar, the former Nigerian vice president and current opposition presidential candidate, promised his supporters that, when elected, he would work to create blockchain and cryptocurrency regulation for the country.
According to local reports, Abubakar made the announcement while launching his policy document ahead of the February 2019 elections. In the policy, he explains that he plans to use blockchain and cryptocurrencies to help improve the country’s economy.
In his policy document titled ‘Get Nigeria Working Again,’ Abubakar also explain that this government will, in addition, create a regulatory framework for the industry. He stated that regulation would help build the industry, in turn, creating thousands of employment opportunities as well as generating income for the government.
He asserted, “My mission is to make sure that Nigeria’s economy is reactive to the challenges of the 21st-century knowledge economy by keeping up with the amazingly dynamic in the technological pace.”
The crypto ecosystem in Nigeria has been on the rise in the last few years and the country is among the top crypto markets in Africa. If Abubakar gets elected as president, the crypto space in the country stands to see tremendous growth. Despite the current crypto prices and challenges, it seems that Abubakar is optimistic about the cryptocurrency industry.
Uganda has plans for new crypto regulations
The cryptocurrency market in Uganda has shown great promise ever since Binance set up shop in the country. Though not as active as South Africa, Nigeria or Kenya, the market is quickly picking up the pace. With this new development, the government in Uganda has decided to set up regulations to govern all crypto operations. According to reports, the government seeks to establish rules that will protect its citizens from illegal activities in the space.
Thousands of Ugandans have fallen victim to one crypto scam or another and many have lost vast sums of money in the process, local news outlets reported. The government fears the economy in the country might become unstable if this trend continues.
According to David Bahati from the Planning and Finance Ministry, his ministry has finished drafting the bill that pertains to national payments. The bill will be presented before Parliament next month for debate and approval. The bill has already been approved by the Cabinet in Uganda and is believed to shine a light on what citizens can do when they find themselves victims to fraudulent activities in the crypto space.
South Africa seeks to regulate crypto through taxation.
In April 2018, the South African Reserve Bank stated that cryptocurrency is not considered “legal tender” in South Africa. Later, authorities in the country imposed tax regulations on crypto owners that require them to declare their gains and losses concerning their transactions involving cryptocurrency.
In July, the National Treasury published the draft Taxation Laws Amendment Bill (the Bill) for the public, the Treasury’s first attempt to regulate the use of cryptocurrency in the country. It proposes changes to both the Income Tax Act and the VAT Act. One of the proposed changes is the inclusion of cryptocurrency in the definition of “financial instrument” in the Income Tax Act.
Experts claim that the new bill will not be favourable for the crypto space in the country. According to the reports, Section 22 and section 22(1)(a) of the Income Tax Act limits the benefits crypto traders get from valuing their undisputed cryptocurrency using the valuation method contemplated in section 22. In addition, Section 11 also represses investment in FinTech companies in South Africa.
The Treasury has also suggested that the “issue, acquisition, collection, buying or selling or transfer of ownership of any cryptocurrency” be added to the definition of “financial services” in Section 2 of the VAT Act.
While some countries seem to be content with not innovating in the crypto space, it is becoming more apparent that African nations see the true value of digital currency in global economies.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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