Business 31 January 2019Dennis Wafula
Crypto in Africa: Tax breaks for South African firms over, Ghana eyes making crypto a legal tender
Africa is taking massive steps to ensure it becomes a blockchain and crypto hub in the coming future. Some countries are even thinking of making cryptocurrencies a legal tender.
Ghana’s SEC looks to make cryptocurrencies a legal tender
While many countries are trying to regulate cryptocurrencies, Ghana’s Securities and Exchange Commission is considering licensing these digital currencies. If their efforts succeed, cryptocurrencies will become a legal tender.
According to reports, the decision to make cryptocurrencies legal tender arose after customers of Global Coin Community, a cryptocurrency company, required assistance in gaining access to locked investments. The company, though not registered or licensed, warns customers that trading is at their own risk.
SEC’s deputy director general, Paul Abadio made these comments while commenting on the Global Coin Community issue:
“When you choose to go there, you are on your own. We have adopted a wide range of changes on it, and we are still doing our research and gathering information, and we welcome any input that people might have to help us formulate a view on how we should deal with it in Ghana.”
Reportedly, businesses around the country have been banned from conducting crypto transactions. SEC hopes that its efforts to make crypto a legal tender will stop illegal operations within the crypto space. In addition to Global Coin Community, authorities are investigating three more crypto firms that are allegedly operating illegally in the country.
This is new territory for the authorities, but they hope to get crypto fully legalized in the country.
No more tax incentives for blockchain and crypto startups
The South African Reserve Bank (SARB) has decided to exclude cryptocurrency developers from paying a tax incentive.
Reportedly, SARB has re-categorized digital currencies as “financial instruments” in the Taxation Laws Amendment Bill. In the new categorization, cryptocurrency development businesses will no longer be able to claim a significant tax deduction. In addition, the new changes also mean that any losses made while trading cryptocurrencies will be “ring-fenced” and will be treated in the same manner as promissory notes, commodities-based derivatives, and future contracts.
Jessica Carr, who is an associate at Cliffe Dekker Hofmeyr explained, “Crypto trade will now be posed with differentiation between losses resulting from the actual trading activities of a taxpayer, and the losses resulting from what could be perceived as the taxpayer’s hobbies or lifestyle activities.”
Some individuals in the country are however not in support of the decision. While talking to reporters, Rob Hare, a senior associate at law firm Bowmans, stated, “The supposedly small change of categorizing cryptocurrency as a financial instrument is an unnecessary step in the wrong direction.”
Initially, authorities had introduced the tax incentive to help increase technological innovation. In the last year, South Africa has seen tremendous growth both in blockchain and crypto related activities making the country a crypto leader in Africa. It is still not clear how this new change will affect the crypto community in the country.
Blockchain and crypto startups invited for Binance Labs Incubation Program
Binance Labs is offering all African blockchain and cryptocurrency startups an opportunity to access funding and support by applying for the Binance Labs Incubation Program.
Binance Lab, a subsidiary of cryptocurrency exchange Binance, was created to incubate, invest in and empower blockchain and cryptocurrency projects, entrepreneurs and communities.
This is the second season of the incubation programme, which offers seed investment of at least $120,000. It also gives startups access to mentors support, exposure to a broader network and other support resources.
According to Binance director, Yele Bademosi:
“With the African blockchain ecosystem still in its nascent stage, this offers tremendous value to African projects, as we can plug them into the top one percent of mentors, founders, investors, and blockchain-focused service providers from the global Binance network.”
The programme is expected to take place across five continents. The program in Africa will be based in Lagos Nigeria. It will be held from March 25 to May 3. During the last three weeks, all teams will be required to gather in Singapore for the program. Those that want to apply for the programme have until January 30 to send in their applications.
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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