South Africa risks missing out on millions in tax due to a lack of cryptocurrency regulation

Half-a-billion rand. That's the minimum in extra tax the South African Revenue Service (Sars) could collect if local regulators made a single regulatory change and designated cryptocurrencies as an onshore asset.

- MARIUS REITZ

If digital assets, such as Bitcoin, were formally classified as an onshore asset, it would allow local asset managers more ease in creating exchange-traded funds (ETFs) tracking its price, opening access to investments in the digital currency to both retail and institutional investors.

Against the backdrop of South Africa’s sluggish economic growth, mounting debt and urgent social challenges, the increasing relevance of digital assets becomes both an investment opportunity and a potential source of tax revenue.

South African founded Luno, which operates in more than 40 countries, has estimated through a conservative calculation that R540 million in tax revenue could be generated over five years.