On Friday, November 20th, the Financial Sector Conduct Authority (FSCA) came up with new guidelines for crypto companies to follow. The new amendment in the crypto law forces crypto companies to officially register crypto assets as financial products, meaning that every pre-existing law about securities and overall taxation of these products will now apply to cryptocurrencies as well.
It’s not clear how the regulator is going to follow through with this new amendment, but one thing we definitely know is that there will be a lot of meetings with local crypto brokers over the next few months.
It is even expected to have traditional finance companies to consult crypto companies on upholding these new laws and following every guideline to the T. What’s more surprising is that some of these crypto brokers are traditional financial companies themselves, just making crypto subsidiaries in order to better fit with local guidelines.
However, now that crypto has been directly incorporated into the financial law of South Africa, we might see some major mergers or sell-offs of household crypto brands in South Africa.
Even though the FSCA has not made any comments about the taxation of cryptocurrencies, it’s only natural to have the same laws apply to these assets as we see to other financial products. What this means is that a certain percentage of capital gains on crypto trading, will be deducted from the traders. Another method would be to expect individual crypto traders to declare their profits to the government and have the exact number provided to them that is due for payment.
But it needs to be noted, that this is just speculation and not something that is already 100% certain.
But, if we take a look at the traditional financial sector, it mostly looks like the government has a direct connection with the brands operating on its borders as well. It’s not necessarily the ministers having contact with company owners, but mostly the South African Reserve Bank and the FSCA conducting regular audits on client profits on different platforms.
For example, people who trade with XM South Africa online are expected to have some kind of audit of their profits every month. This will either be directly informed to them by XM, or the government will send a letter of payments due.
Naturally, all of this information is gathered in conjunction with the service provider, as it’s one of the criteria for qualifying for an operations license.
Therefore, many traders have already flooded their crypto service providers with questions, whether or not they should be expecting letters from the revenue service at the end of the month.
The main reason why questions are flooded is that the majority of crypto capital still remains as crypto on multiple accounts. The traders would have to liquidate their assets and pay their due payments. Considering that the BTC is expected to grow within the next week, it’s in the traders’ best interest to pay the tax now when the BTC is slightly down, rather than have to pay it once it passes the all-time high.