Increased South African Bitcoin Adoption.
With Localbitcoins trading volume up over 20% in recent weeks and over 1,000 merchants accepting bitcoin in South Africa, it’s clear that the nation’s lawmakers must provide a regulatory framework for businesses and speculators to operate within.
The recent increase in South African Localbitcoins trading volume can be interpreted as an indication of a real increase in bitcoin adoption, as supported by trading volume on the nation’s major exchange, Luno, also seeing a steady rise.
By 2017 many developed nations have begun to move towards the introduction of a permissive regulation designed to stimulate growth within Bitcoin’s associated industries. In recent months Japan has eliminated taxation on Bitcoin trading, declared Bitcoin to be exempt from consumption tax, and eliminated the possibility of double taxation on trading. Australia has moved towards ending its long-standing double taxation on bitcoin by proposing that transactions involving digital currencies no longer be subject to Goods and Services Taxation, and South Korea has also introduced permissive regulations.
Despite progressive movements by developed South African counterparts, the Reserve Bank of South Africa has not published a Position Paper on Virtual Currencies since 2014 when Bitcoin’s market capitalization was less than a quarter of its current $46bn USD total, which many citizens feel emphasizes the need for regulators to catch up with the industry.
South Africa recognizes the basic rights of citizens to own, buy, mine and conduct private transactions with bitcoin, however, there is currently no fiscal regime for bitcoin mining or trade. Bitcoin is not currently classified under any type of assets or currency, leaving companies that operate with virtual currencies unsafe as to whether they are likely to incur retroactive capital gains taxes in the future.
Despite the ambiguity surrounding the audit, some have argued that South African regulators are highly permissive toward blockchain technology arguing that the absence of a ratified legal framework does not hinder bitcoin-related enterprises from conducting their business.
Although South Africa’s Tax Service has stated that both speculation and transactions in Bitcoin are subject to general South African tax law, the absence of clear legal scheduling pertaining to digital currencies likely has a stifling effect on investment and innovation within the South African bitcoin economy.
Disclaimer: This press release is for informational purposes only. Information does not constitute an investment advice or an offer to invest. The opinions expressed in this article are those of the author, they do not necessarily represent infocoin views and should not be attributed to Infocoin.