Africa’s own cryptocurrency on the cards
Publish date: 11 April 2018
Issue Number: 1727
Diary: Legalbrief eLaw
Johannesburg-based company Trapeace Holdings is developing an African-focused cryptocurrency that it hopes will take on established players like bitcoin. According to Trapeace, the cryptocurrency – Africa Master Coin – will be for exclusive use in Africa and will enable more efficient foreign investment as well as faster and easier trade within the continent. ‘The cryptocurrency is still being developed and finalised and will be ready to launch later this year, around October. However, development has been under way already for over a year,’ George Gordon, director of Trapeace Holdings, reportedly told ITWeb. He said many African companies operate across borders within the continent and paying suppliers is known to be a cumbersome process. ‘A uniquely African cryptocurrency will greatly improve cross-border payments between African countries. Our goal is to make the Africa Master Coin as accessible and usable as possible.’ He explained that Africa Master Coin will produce tokens that are fixed at a constant value to local currencies. SA, for example, would have a local token that is fixed to the rand. If 10 Africa Master tokens equal R1, then this would forever be the benchmark for the currency in this country. David Orban, a cryptocurrency expert who claims to be the first person to own ether when it was launched in 2014, said that in Africa, like the rest of the world, there is ample possibility to launch, support and bring to success new blockchain-based cryptocurrencies. ‘The sum of the economies of the African countries could certainly deserve such an effort,’ he notes.
SARS has warned taxpayers that they could be penalised if they do not declare cryptocurrency gains and losses. According to a Business Day report, SARS said it deemed cryptocurrencies – such as bitcoin and ethereum – as intangible assets, rather than ‘a currency for income tax purposes or capital gains tax’. SARS said the onus was on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties, it said. SARS said taxes could be applicable to cryptocurrency mining, trades on cryptocurrency exchanges, and the purchase of goods and services using digital money. Meanwhile, taxpayers were entitled to claim expenses associated with cryptocurrency accruals or receipts, provided that this expenditure related to the taxpayer’s income generation ‘and for purposes of trade’. The report notes the government is still considering how VAT will apply to cryptocurrencies. ‘Pending policy clarity in this regard, SARS will not require VAT registration as a vendor for purposes of the supply of cryptocurrencies,’ it said. The SA Reserve Bank is working with the National Treasury, the Financial Services Board and the Financial Intelligence Centre to evaluate potential regulatory frameworks for cryptocurrencies.