South Africa gov’t creates a working group to probe crypto activities

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The South African government has established a crypto assets regulatory working group to investigate cryptocurrencies and blockchain concepts.

In a letter to Parliament, Tito Mboweni, the finance minister of South Africa, stated that the working group was created to come up with a unified intergovernmental regulatory framework throughout the country. The group is also tasked with developing a cohesive governmental response to cryptocurrencies and technologies surrounding the economy.

In his letter, Mboweni said that the working group includes representatives from the Financial Sector Conduct Authority, the Financial Intelligence Centre, Treasury, the South Africa Revenue Service (SARS) and the Reserve Bank.

Mboweni further added:

“It is anticipated that, following broad industry comment and participation, the crypto assets regulatory working group will be ready to release a final research paper on the subject during 2019.”

The minister and the former Governor of the South African Reserve Bank further explained to Parliament that last year, SARS was having a hard time in accurately tracking the amount of capital profits and losses declared on cryptocurrencies. This is because the current tax forms do not have provisions for taxpayers to declare cryptocurrency capital profits. However, Mboweni stated that there are efforts underway with SARS to make amendments of the tax forms for the 2019 tax season. The changes will provide for a specific description field of other assets, including cryptocurrencies, on the form.

The current Taxation Laws Amendment Bill of 2018 gives details of how cryptocurrencies should be treated when it comes to the filing of VAT and income tax in the country. Mboweni proposed amendment will further clarify and bring better efficiency to the tax system in South Africa. In conclusion, Mboweni added that the proposed changes would explain whether or not cryptocurrencies can be classified as personal use assets or capital gain taxes.

The cryptocurrency community in South Africa has grown tremendously according to a July survey conducted by the Old Mutual, Pan-African financial service company. In their report, 38% of South Africans wish they had made an early investment in crypto. In another survey, about 70% of people in South Africa believe cryptocurrencies to be an investment opportunity, with the majority already holding crypto over the long term. With the numbers rising by the day, Mboweni and the government believe it is high time proper regulatory structures are created for the industry.