South African Crypto Investors and Service Providers Told of Legal and Tax Implications of Central Bank’s Plan – Regulation Bitcoin News

South African tax consultancy firm Tax Consulting SA, has said the recent announcement by the central bank — that will start to regulate cryptocurrency in 12 to 18 months — has legal and tax implications for both crypto investors and organizations providing intermediary services. The firm, however, says the South African Reserve Bank (SARB) “will not interfere in the investment decisions made by crypto investors.”

As Financial Services Providers, Intermediaries must register

According to a South African tax consultancy firm, Tax Consulting SA, recent revelations by the central bank deputy governor that his institution intends to regulate cryptocurrency in 12 to 18 months, means cryptos “will soon be regulated under the Financial Advisory and Intermediary Services (FAIS) Act.” This, therefore, means all organizations or individuals deemed to be providing intermediary or advisory services will be required to register as financial services providers with relevant bodies.

Tax Consulting SA shared a report with Bitcoin.com News that predicted that SARB would introduce Know Your Customer (KYC), procedures, and regulations for exchange control. The consulting firm is, however, quick to point out that the South African Reserve Bank (SARB) “will not interfere in the investment decisions made by crypto investors.”

Instead, the central bank will issue the so-called “health warnings” and provide adequate protection to investors who are at risk of losing everything. The consulting company insists that all investors must adhere to specific reporting standards, even though the SARB did not prohibit cross-border investment and crypto trading.

Tax Impacts

The tax firm’s report in the meantime warned of possible tax implications that may arise which crypto investors must be aware of. According to the report:

Another concern will be in relation to tax compliance, for example, as tax evasion will be much more easily detectable with transactions falling under the purview of the SARB’s Financial Intelligence Centre (FIC).

Once the regulatory framework is in place, non-compliance will be easier to spot and at that point, South Africa’s “wild west” crypto industry will be a thing of the past, the report concludes. Tax Consulting SA also warns that during this period prior to the introduction of the regulatory regime, “crypto investors [need] to ensure that they are up to date with their compliance obligations.”

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Terence Zimwara

Terence Zimwara was a Zimbabwe author, journalist and writer who won the award. He is a prolific writer on the economic woes of African countries, as well as digital currencies that can be used to provide an escape path for Africans.