In terms of cryptocurrency acceptance, South Africa is among the top 20 nations in the world. In addition, for the first time, crypto trading in the country just surpassed $141 million.
However, according to a local newspaper, new draft guidelines would prohibit South African pension funds from investing in Bitcoin and other cryptocurrencies. If the plan is approved once the public comment period ends on November 12th, no pension fund would be able to “directly or indirectly invest in crypto-assets.”
Previously, Regulation 28 of the Pension Funds Act allowed for a maximum of 2.5 percent of assets to be invested in “other assets,” which might have included cryptocurrency. According to the article, revisions to the Act would specifically prohibit crypto investments.
Regulators are concerned about the growing number of individuals who seek investment advice from peer groups rather than financial specialists. This led in a slew of cryptocurrency frauds, two of which originated in South Africa.
In a recent podcast, Eva Crouwel, head of global financial crime at Luno, mentioned that among Luno’s 2 million customers in South Africa, the elderly were becoming a susceptible target for crypto scams.
Other concerns of compliance are also being addressed in the country. The country developed a unique location for disclosing owned crypto-assets for tax reasons last month.
Regulators, on the other hand, have recently taken notice of non-compliance with crypto-assets. In a panel discussion, Thomas Lobban, Head of Crypto Asset Taxation at Crypto Tax Consulting, remarked,
“Non-compliance is still proving to be an issue in the crypto asset space among South Africans…”
Another tax expert warned crypto traders who brag about their profits on social media that the South African Revenue Service may come after them (SARS). These might be initiatives to regulate a sector that currently has no regulatory structure in place in the country.
It’s worth noting that only last week, a major bank delivered a termination notice to a crypto platform that provided clients with arbitrage services.
It’s also possible that the lack of tax compliance on the side of crypto investors, as well as the growing number of frauds in the sector, has prompted South African officials to tighten the laws. As a result, the nation is likely to close any potential investment loopholes in the crypto industry and issue more regulations in the future.
