South Africa Remains a Pocket of Growth for Cryptocurrencies
Cryptocurrencies like Bitcoin have seen a surge in popularity across South Africa as the nation grapples with growing political uncertainty, high unemployment rates and liquidity issues.
The issue of land reform in South Africa has become a source of concern recently as the new president Cyril Ramaphosa vowed to change the constitution, allowing white-owned property to be taken without compensation and redistributed to blacks who do not own any farmland.
Currently, Africa has an extremely high unemployment rate of over 25% as well as the highest rate of economic crime (77%) in the world, according to an Economic Crime Survey by PwC.
South Africans get first dibs on SAFCOIN
Amidst growing economic and political concerns in South Africa, a blockchain company FHM (Pty) Ltd has launched the ICO for SAFCOIN, an exclusive African cryptocurrency that aims to make digital currency investment easy and understandable for everyone in Africa.
- 500,000 SAFCOIN tokens is available exclusively to South Africa during the ICO.
- In October, the remaining 5,000,000 SAFCOIN will be listed on an exclusive exchange, as well as on African and global cryptocurrency exchanges.
- Already, +400 e-commerce companies were willing to accept SAFCOIN as payment, according to FHM.
Co-founders Neil and Tony Ferreira hope to see “SAFCOIN become a widely accepted form of payment across the entire African online trading community” by “eliminating red tape and bulky transaction processes.”
South Africa not safe from crypto scams
Despite many global exchanges reaching record levels of visitors from South Africa, there have been some high-profile scams that shook the market and left many investors wondering if parking money in crypto is the optimal solution.
In March, a massive Ponzi scheme in the country (BTC Global) affected around 27,500 virtual currency investors and stole at least $50 million from victims. According to South Africa’s Directorate for Priority Crime Investigation, BTC Global representatives promised “2% interest per day, 14% per week and ultimately 50% per month” for investment returns.
South Africa Revenue Service (SARS) released a draft cryptocurrency tax legislation
On August 8, South Africa released a draft that defines the framework of virtual currency taxation in the country. Under the draft, digital currencies like Bitcoin will be classified as intangible assets subject to income tax. If the draft legislation is adopted, then South Africans will be mandated by law to declare income accrued from crypto transactions.
Summary of draft tax legislation:
- Cryptos are classified as intangible assets subject to income tax
- Cryptos are exempt from value-added tax (VAT)
- Buying, selling, transferring, owning, issuing, and holding cryptos is different from using cryptos in financial service transactions.
While the general public in South Africa somewhat embraces digital currency as an alternative form of investment, the country’s central bank chooses to call cryptocurrencies “cyber-tokens” because they “don’t meet the requirements of money.” The bank is currently reviewing its stance toward cryptocurrencies in order to develop a concrete policy framework and regulatory system.
“B2B reporter – Content Manager – Contributor – Fintech – Blockchain – Cryptocurrency”
Simon Chou is a B2B reporter and content manager specializing in technology and finance. He has worked with many clients in the fintech and blockchain space. He holds investment positions in bitcoin and other large-cap cryptocurrencies, and has been reporting on cryptocurrency since 2017. Currently, Simon is the content manager for a major cryptocurrency exchange @HybridBlockHQ.