SARB hesitation is stifling Bitcoin and Ethereum growth in SA
With increasing local demand for Bitcoin, Ethereum and other crypto-currencies, the nation’s lawmakers must begin providing a regulatory framework for businesses and speculators to operate within, says Bitcoin.com’s Samuel Haig.
Citing a 20% increase in local Bitcoin – and the fact that over 1,000 merchants now accept Bitcoin in South Africa – Haig noted many developed nations have begun to move towards introducing permissive regulation designed to encourage growth within Bitcoin’s associated industries.
This includes recent regulations allowing for a complete elimination of trading taxation on Bitcoin in Japan as well as exemption from a consumption tax.
“South Africa recognizes the basic rights of citizens to own, purchase, mine, and conduct private transactions with Bitcoin, yet no tax regime currently exists for Bitcoin mining or trading,” said Haig.
“Bitcoin is not currently classified under any asset or currency status, leaving businesses operating with virtual currencies unsure as to whether or not they are likely to incur retroactive capital gains taxation in the future.”
This is highlighted by the fact that the SARB has not released a Position Paper on Virtual Currencies since 2014 – when Bitcoin’s market capitalization was less than a quarter of its current $46 billion.
“Although the South African Revenue Service has stated that both speculation or transactions conducted in Bitcoin are subject to general South African tax law, the absence of clear legal scheduling pertaining to digital currencies likely has a stifling effect on investment and innovation within the South African Bitcoin economy.”
The result is that, while trading and mining is likely to continue freely within the country in the time being, genuine regulations will need to be put in place by the Reserve Bank in the near future, Haig said.
Read: SA law firm Bowmans launches its own cryptocurrency – BowMoney
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