by Richard Gardner
Earlier this month, South African President Cyril Ramaphosa signed the Taxation Laws Amendment Act, which offered technical updates to a host of laws.
Notably, crypto-assets, including security tokens, became classified as “financial instruments” rather than currency.
For tax purposes, crypto-assets have been given hobby status, meaning that losses cannot be written off against profits made on other income streams.
The African continent has distinguished itself as an area full of intense crypto-enthusiasm. That interest, clearly, has inspired real action among South African politicians.
As governments begin to offer guidance on this most innovative industry, it will go mainstream.
Just after the ink dried on the Taxation Laws Amendment Act, the Crypto Assets Working Group published a consultation paper on policy proposals for crypto assets.
This paper is meant to “develop a regulatory policy response to deal with cryptocurrency’s potential impact on [South Africa’s] financial sector, provide greater clarity for regulators, address identifiable risks, and respond to the nation’s growing interest in participating and investing in the crypto space.”
This is good public policy. It is a signal to the crypto community that South Africa is open for business. Right now, security tokens are en vogue. As that segment of the crypto-assets class becomes more and more notable, mainstream investors will begin to take notice.
Security tokens are likely to transform the industry, and, right now, South Africa is poised to take advantage of this momentum.
There are certain risks in crypto right now, and those risks are often closely tied to the exchange utilized to trade digital assets.
As new investors begin to look at crypto, they should be certain to ask about the security protocols employed by the exchange they use. This is the best way to minimize risk.
- Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading technology that powers global equities, derivatives, and cryptocurrency exchanges