Last Wednesday the South African Minister of Finance, Mr Malusi Gigaba, gave his first and possibly last budget speech for the 2018/2019 year.
The headline grabbing announcement was the 1% increase in the value added tax rate that will be used to fund free tertiary education for poor and working class families. Towards the end of his speech though my attention was caught by his remarks on an anticipated strengthening of the regulations governing the South African FinTech market. His full comment, courtesy of the published transcript of the budget 2018 speech:
“Work will continue on reforming the legislation for financial markets and the payment system, to ensure that our infrastructure remains globally competitive. The Treasury is working with the Reserve Bank, Financial Services Board and other government entities towards a regulatory framework for all types of FinTech.
For instance, the emergence of cryptocurrencies is a major development to which our regulatory regime must respond.”
So, is there some Bitcoin crypto currency regulation on the way for South Africa? Unfortunately the National Treasury’s Budget Review doesn’t give any more clarity despite being almost 300 pages long.
Budget Review, on page 136:
“Tax treatment of cryptocurrency transactions: Cryptocurrencies are addressed by existing provisions in South African tax law. Cryptocurrencies pose risks to the income tax system as they are extremely volatile and their sustainability is uncertain. At the same time, the supply of cryptocurrency can cause administrative difficulties in the VAT system. To address these issues, it is proposed that the income tax and VAT legislation be amended.”
Budget Review, on page 160:
“In 2018, the Reserve Bank, together with the other domestic financial sector regulators, will publish a position paper on the evolving uses of private cryptocurrencies. A cryptocurrency is a digital asset that is used as a medium of exchange. It uses cryptography to secure transactions, both to control the creation of additional units and to verify the transfer of assets.”
There might not be anything concrete yet, but it does seem like additional regulation of the FinTech industry and crypto currencies is planned.