Why South Africa wants to regulate cryptocurrencies

Why South Africa wants to regulate cryptocurrencies
Published: 03 May 2019 (4065 Views)
South Africa as a financial market participant has been on the rise in the last decade or so. Their prowess in financial knowledge, the growth of their economy, alongside the private equity indicator is proof that the quality of life is on its way towards improvement.

However, what shocked everybody in the world, was the survey conducted to find out which country has the most cryptocurrency literacy. Judging from the results, it's safe to say that in terms of literacy South Africa may not be #1, but is definitely the country with the largest possession of cryptocurrencies among its internet users.

Such a revelation had a massive impact on how the local government looks at cryptocurrencies as a whole. Thanks to technology's feature of being anonymous, it was very hard to determine the exact scale of the industry inside SA. The size of this market brings in, opportunity as well as multiple problems for the local government.

Loss of control over SA's gambling market
The South African government devotes quite a lot of attention to their local gambling market. Ever since the 1996 Gambling Act, the country has been doing relatively fine in terms of keeping the industry under control. This was all thanks to the payment methods that could be tracked, and the mandatory license that online operators had to apply for. But now, seeing how cryptocurrencies are slowly starting to dominate the online gambling market, SA's government is fearful of the loss of control over their local market.

According to experts from play.casino, foreign gambling operators have the capability of catering to SA's gambling population without having to apply for a license. In fact, they don't even have to market it as a SA exclusive platform, all they need to do is provide a cryptocurrency payment platform. The players themselves would be able to access it without any issues and make transfers without the government or anyone else ever finding out.

This loss of local capital, customer base and the missed revenue from licenses and taxing is definitely not beneficial for SA, however, the potential massive influx of crypto companies within the country prevents them from introducing a crippling regulation.

Potential for additional tax income
There is no government in this world that would refuse a new source of income, and South Africa is not an exception. Currently, their regulatory framework does allow them to collect taxes from the companies located within the country, but the collection of taxes on profits from crypto trading still remains to be quite hard.

If the regulations are tightened and the companies are forced to disclose information about their customers' trading activities, it is pretty much guaranteed that the volume will go down. There are dozens of crypto exchanges that operate internationally and don't need to conform to such rules unless directly confronted by local authorities.

An introduction of stricter regulations is going to hit the SA crypto market in its core, in its potential. Most of the companies that are considering to move their base of operations there would simply opt out due to changing conditions. And the traded volume with local operators would decrease as well. In conclusion, the SA government would be shooting itself in the foot.

- Byo24News

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