Now that we cleared the air, we can move on to the new proposed regulations and rules thrown into the room full of formalism, positivism, paper-trailing, bureaucracy and time-consuming procedures laid down by scribes and snakes.
Brief
In 2019 I saw a thin book circulating amongst accountants. On the first page, one goal of the South African Revenue Service was to work with the Davis Tax Committee to find solutions to tax cryptocurrency. The situation developed into legislative measures important to international companies trading with and providing crypto-exchange related services to SA citizens. The Crypto Assets Regulatory Working Group (CARWG) published a new paper on the regulation of Crypto-Assets in South Africa. True traditional crypto traders bow their heads, knowing their financial independence are at stake.
Individuals using crypto for illicit trades can also use conventional government-issued (FIAT) currency for illegal trades. It makes no difference. The smart guys updated the law books and here we are, looking at corruptible individuals trying to:
- regulate a system with set-in-stone operating rules;
- tax currencies not issued or created by them;
- monitor a public open-source ledger to tax or report transactions of their own citizens;
- see how much we give and get;
- get a piece of the pie they never pitched into;
- set limits on the potential of individuals looking to trade internationally;
- hinder the potential of individuals to attain financial independence.
The list continues and the positive points are not the concern here. There is a looming distrust in the air when it comes to government. The same people responsible for making 1 USD = 1-2 ZAR into 1 USD = 17-18 ZAR.
Regulations
Now that we cleared the air, we can move on to the new proposed regulations and rules thrown into the room full of formalism, positivism, paper-trailing, bureaucracy and time-consuming procedures laid down by scribes and snakes.
You can read the IFWG Working Paper here.
The CARWG consist of teams from National Treasury, the South-African Reserve Bank, the South-African Revenue Service and the Financial Intelligence Centre. Together they work on a policy while ensuring the continued integrity and functioning of financial markets, maintain financial stability, to protect the interests and rights of customers and investors and to combat illegitimate cross-border transactions. The group identified the following risks associated with cryptocurrencies:
- the risk of a parallel, fragmented, non-sovereign monetary system;
- consumer protection as well as market efficiency and integrity risks;
- the risk of an undefined legal and regulatory framework;
- money laundering and terrorism financing;
- exchange control risks;
- cyber security risks; and
- dodgy initial coin offerings (ICO's)
They introduced the term Crypto-asset service providers or CASPs. The various categories of CASPs are defined as follows:
The definition of a CASP will be incorporated into section 1 of the Financial Intelligence Centre Act (FICA), making them subject to the regulations of the said Act which includes:
- KYC identification and verification
- Conducting customer due diligence
- Record-keeping
- Monitoring suspicious and 'unusual' activity on an ongoing basis
- Reporting of the latter kind of transactions to the FIC
- Reporting cash transactions of the applicable threshold at any given time
- Reporting in respect of control of property that might be linked to terrorist activity or terrorist organisations
CASPs will have to do risk assessments on customers and maintain information on account holders and their beneficiaries. There will be penalties for non-compliance. Crypto-assets will not be recognised as electronic money. The regulation of ICO-issuers must align with the regulation of issuers of securities or financial instruments. The pooling of crypto-assets will be regarded as an alternative investment fund requiring a license.
Members of the public and stakeholders are requested to provide comments on the paper by 15 May 2020.
You can provide your comments by mailing it here. And here.
We understand that authorities are obliged to look after their citizens and protect them from criminal activity, but we fail to understand why they have to be put at a disadvantage in the process. We chose and developed crypto for privacy, security and preservation of our autonomy and individual power to make things happen outside the tiring, constricted boundaries and time-consuming procedures of bureaucracy. For more information on how to prevent big data companies from running their algorithms on your trades or look into your financial circumstances with other companies, follow this guide. We completely disapprove the funding of terrorism, trade in illegal goods, money-laundering and the bad things, but it's not okay to tax things that you didn't issue or develop.
