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Bitcoin in South Africa: Live ZAR Price, Best Exchanges, Taxes, and History
South Africa is arguably the most Bitcoin-friendly country on the entire continent. So, if you’re a cryptocurrency investor or someone looking to buy Bitcoin for the first time, the good news is that you won’t have a hard time. In all of Africa, South Africa remains something of the ‘blockchain hub’ of the continent, largely thanks to its open legal environment.
Political tensions and economic instability have also made Bitcoin an incredibly popular asset class in the country. Given the country’s currently high inflation rate, we can likely expect an interest in cryptocurrencies to continue to grow in South Africa.
Is Bitcoin Legal in South Africa?
Bitcoin is completely legal in South Africa. In 2014, the Reserve Bank of South Africa issued a paper on digital currencies, declaring them as having “no legal status or regulatory framework.” Since then, the South African Revenue Service classifies Bitcoin as an ‘intangible asset’ and is completely free to store, trade and spend.
So, it seems as though Bitcoin as ‘no legal framework’ but is not illegal. It is essentially unregulated, for now.
How to Buy and Sell Bitcoin in South Africa
Most in South Africa purchase Bitcoin through an exchange. Many options currently exist to easily trade the leading cryptocurrency. However, there are also other methods, beside exchanges, to get your hands on some Bitcoin as well.
Top Bitcoin exchanges in South Africa
Despite having a relatively open legal environment, many major exchanges have still been slow to migrate and open their services in the country. Coinbase, for example, is not available in South Africa. Still, there are other less well-known but still trustworthy exchanges currently available to South Africans who wish to purchase Bitcoin.
Luno is a UK-based Bitcoin exchange which offers exchanges in South Africa, being one of the few to offer a ZAR/BTC trading pair. If you place an order, there are also no fees for using the platform. Luno is currently one of the most trusted Bitcoin exchanges, widely used in Asia especially. With low fees, it is a top pick for South African investors.
CoinMama is one option for South African traders, but the fees are hefty. The exchanges charges a 6% fee on each purchase, one of the highest for any Bitcoin-related broker. Luckily, though, the exchange also accepts credit cards. Truly global, CoinMama is available all over the world including South Africa.
CoinCorner is available in South Africa, but investors should be aware that the exchange does not have a ZAR-based trading pair. If you are looking to buy and hold, CoinCorner is a good pick considering that they are a trusted, regulated company based in the UK with strong customer service. However, they do have a high trading fee of 1% so keep that in mind if you are trading.
ICE3X is a cryptocurrency exchange which offers trading pairs in the South African Rand as well as ETH and BTC. It is currently registered as an “Internet Currency” company, one of the first in the country. It is owned and operated in South Africa. The exchange boasts a 100% cold storage policy so all withdrawals are manually checked. Deposits of fiat or cryptocurrencies are free.
Of course, there exists other methods of buying BTC. For example, the LocalBitcoins escrow servers matches buyers and sellers directly. The trades can either happen over the internet or even in-person. Just beware of scams.
There are also a handful of Bitcoin ATMs in South Africa. As of now, there are a total of 6 in the country which can be used to buy Bitcoin. This number is expected to grow in the coming years.
South Africa’s Tax Rules on Bitcoin Profits
The situation surrounding taxes and Bitcoin is still unclear in South Africa. However, it generally falls into one of two categories: it is either taxed as income or as capital gains.
If you acquired cryptocurrency with the intention to actively trade it, then it counts as gross income. This means you have to pay income tax on it. If you acquired Bitcoin as a long-term investment and plan on keeping the cryptocurrency for more than 3 years, then it counts as capital gains. This means it is subject to capital gains tax.
Altogether, be sure to check with SARS to assess what tax bracket you fall in and what part of the tax code applies to you. Moreover, if you have any cryptocurrencies losses, you can also report this for tax benefit.
Where to Spend Bitcoin in South Africa
Bitcoin has a handful of locations where users can spend Bitcoin freely. For example, there are various stores, like fashion clothing store provider BLVD Boutique, which accepts Bitcoin. Sometimes chains in the country, like Applebees, also accepts Bitcoin as well. There is a long list of locations that currently accept Bitcoin, from bookstores to designer brands.
However, if you are struggling to find any location to spend your BTC, you can also opt to ordering online. More online vendors accept BTC than ever before. From computer parts to furniture, there are options for Bitcoin holders looking to spend their crypto. Just make sure that the vendor ships to South Africa.
Bear in mind that the cryptocurrency community is still small in South Africa, but growing quickly. Even these small amount of stores which accept BTC is a significant improvement from where the industry was just a year or two ago. So, we can likely expect more mom-and-pop shops to start accepting cryptocurrencies in the coming years.
History of Bitcoin in South Africa
African banks have been a bit late to the fintech party, but since mobile phones have made such a huge impact on the financial industry in the African countries, banks are looking at this continent to test out new technologies like Bitcoin and Blockchain.
To give you some perspective, MPesa, a peer-to-peer mobile money platform, owned by Kenya’s Safaricom and heavily funded by Silicon Valley giants has forever changed the way people do money transactions in East Africa.
They allow merchants in Kenya to accept payments through mobile phones.
This has lead three-quarters of Kenya’s adult population to register as MPesa users and nearly one third of the country’s GDP is now transacted through MPesa. Increasing penetration of smartphones in all of Africa is only going to further benefit MPesa and the likes in future.
Interestingly, MPesa was founded by three Americans, who came up with the idea on a whiteboard in a Seattle basement, before bringing it to Kenya.
“You have a headwind from Silicon Valley and Europe blowing into Africa now around the disruption in fintech. The banks are really nervous and they want to get ahead of this,” says Mbwana Alliy, managing partner at African technology venture firm, the Savannah Fund.
This disruptive technology is scaring the banks from losing the grip. Banks like Barclays Africa and others are trying to adopt these innovations with the reputations of trust they believe legacy institutions bring.
Vinny Lingham, a South African serial entrepreneur and founder of blockchain startup, Civic, believes Africa will be disrupted faster than any continent in the world. He feels that a trustless method will remove the need for traditional banks.
“You don’t need third parties like banks operating as trust brokers anymore. It’s all built into the code. The way mobile leapfrogged fixed lines communications in Africa, blockchain will leapfrog a lot of the financial infrastructure that exists today.” he adds.