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South Africa Establishes Crypto Assets Regulatory Working Group

Distributed Summary:

  • Finance minister announces working group including Financial Intelligence Centre, Treasury and Reserve Bank to “develop a cohesive governmental response to cryptocurrencies”
  • Hopes to release findings this year
  • Appears to be taking steps to prepare country’s legal system for increased crypto adoption

According to a local report, the South African government is forming a group “to investigate all aspects of cryptocurrencies and related blockchain concepts.”

The plan is set to go forward with support across government agencies, per BusinessDay. Finance minister Tito Mboweni is the most prominent spokesperson for the bill, publicly stating that the project’s goal is in “developing a cohesive governmental response to cryptocurrencies and a unified intergovernmental regulatory framework.”

To this end, Mboweni stated that “the working group includes representatives from the Financial Intelligence Centre, Financial Sector Conduct Authority, Treasury, the Reserve Bank and the South African Revenue Service (Sars).” Mboweni hopes that the group will be able to release reports on its findings in 2019.

This group seems poised to alleviate some of the problems that Sars has been having with the crypto industry. Mboweni stated that the Revenue Service is “unable to accurately trace the number of declarations pertaining to capital profits on cryptocurrencies as the existing income tax return forms do not make provision for taxpayers to specifically declare capital profits regarding cryptocurrency.”

“Work is under way within Sars to consider the amendment of the tax forms for the 2019 tax season in order to cater for the description of other assets (which will include cryptocurrencies),” said Mboweni. And the report claims that Sars will apply normal income tax rules to crypto assets.

The report went on to state that South African tax regulators have been considering further clarifications on crypto’s status in the nation’s financial ecosystem. Measures such as preventing the declaration of cryptocurrency as personal-use assets and treating crypto assets as financial services were included. From this perspective, it seems as if South Africa is taking steps to prepare its legal system for further usage of crypto in the nation.

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