South Africa is getting proactive about its crypto regulations
South Africa has become one of the centers for the cryptocurrency industry across Africa. The crypto adoption rates have been growing but the development has not come without a price.
While South Africa has always been one of the pioneers in the financial and technological field for the continent, the regulations have never been its strong suit. Even couple year ago, when forex trading was first taking off in the country, while there were many trustworthy brokers in SA, there was also an influx of companies trying to scam money out of the customer because the regulations that were in place back then, left a lot of room for illegal activity across the country. These liberal regulations were what first allowed the industry to thrive in the country until it brought the situation to a critical mode just a couple of years after.
We could say that the same pattern is unfolding before our eyes as South Africa is embracing cryptocurrency but regulations are still in the developing stages and could potentially leave room for mistakes and criminal activity.
While regulations around cryptocurrency are still somewhat unclear in SA, there are clear cut taxes that all cryptocurrency users should be paying. SARS is currently working on developing a tool for monitoring cryptocurrency users that are avoiding taxes. This is a huge step for the entire country and could potentially filter out many criminal cases that are connected with the crypto industry. SARS is on a mission to develop technology that would help the government to keep up with the changes in the present technological landscape and that would make the detecting fraudulent activity not only possible but easy. This update is a part of SA’s 2024 vision that aims to build an innovative way to out those who avoid paying taxes, not only in cryptocurrency but across the whole financial industry.
The authorities are relying on data science as a discipline that will create these tools that will manage to handle the workload and deliver effective results.
Amidst the ongoing tax reform, it looks like South Africa has learned from its past experience of working with financial innovations and is now working towards avoiding the situation with the forex brokers from repeating itself yet again. The regulation is clearly defined but there are basically no tools to ensure that users follow the existing guidelines. With the efforts of SARS there is a chance that the tax evasion could become really difficult for those working from South Africa, which in turn will make the country just that much safer for crypto users, but will also make sure that those avoiding the law get appropriate treatment.
South Africa has proven itself to be full of potential when it comes to innovations but these technologies hold a big threat to countries with weak regulations and no tools to fight or detect illegal activity. This move could change the way SA financial industry operates and could open many more doors for those living within its borders.