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South African Tax Authorities Want To Track Digital Currency Trades

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blockchain technology can help Africa

In 2017, bitcoin has finally become mainstream and its global adoption is on the rise. But while bitcoin is now being recognised by most investors as a viable asset class, its quasi-legal status has led to regulators grappling with ways on how to integrate it within their current monetary structures. According to South African media outlet Moneyweb, one such regulator is the South African Revenue Service (SARS), which is currently exploring means of tracking cryptocurrency trades more efficiently.

SARS Collaborating with Other Tech Companies to Track Cryptocurrency Trades

Bitcoin’s bull run, which has seen a price surge of more than 1600 percent this year, poses a threat to SARS’ revenue collection efforts since it has to depend on cryptocurrency traders truthfully disclosing their profits. Normally, financial institutions such as banks have stringent KYC (Know-Your-Customer) processes in place to identify customers and information on clients’ investments are forwarded to the regulator for verification.

However, due to bitcoin’s pseudo-anonymity, the information on digital currency transactions is hard to come by and the regulator has to rely on taxpayers being honest about their cryptocurrency gains. To mitigate against non-disclosure of profits, the SARS is having discussions with several leading technology companies on how to track digital currency trades.

Speaking to Moneyweb, SARS Head of Research, D. Randall Carolissen, states,

“As you can imagine it is very difficult – the blockchain technology. Without revealing too much – we are talking to some of the top technology companies in the world that [are] doing similar work for Canada and the UK and we are hoping to get that technology.”

While SARS is yet to make any formal announcement, the regulator has adopted the Organisation for Economic Cooperation and Developments (OECD) recommendations, which outline how cryptocurrencies should be treated.

“We were part of the OECD working groups and that has certainly been incorporated into our policy environment. So we are on top of it. In fact, South Africa is cited as one of the leading implementers of this cryptocurrency environment,” Carolissen adds.

SARS Treating Cryptocurrency Trades as Taxable Events

Presently, the regulator is grouping digital currencies in the capital realisation category, and thus similar to trading shares. If you buy at a particular point and sell it down the road, you will be faced with capital appreciation. Subsequently, you will have to pay Capital Gains Tax.

Following this logic, SARS is partnering with the South African Reserve Bank (SARB) to critically examine and match the flow of funds in and out of the country with the actual movement of goods, so that no information is withheld from authorities.

Curiously, in a 2014 position paper, the South African Reserve bank asserted that it did not supervise or regulate the digital currency landscape and all activities related to the buying, using and trading of cryptocurrencies is at the end- users sole risk with the bank bearing no responsibility for any losses.

According to Ruaan van Eeden, the head for tax and exchange control at the Geneva Management Group, the company is receiving numerous inquiries about the exchange control and tax treatment of digital currencies. He argues that cryptocurrency profits should be dealt with singularly, dependent on the facts of each case and not be applying the same principle to each scenario.

The price volatility in the cryptocurrency markets has led to bitcoin traders making huge profits in the past few years. For the South African tax authority, the challenge is to come up with guidelines that clearly define cryptocurrencies and spell out the tax consequences of bitcoin activity.

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Binance Launches Fiat-to-Crypto Exchange in Uganda

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Binance Launches in Uganda

Global bitcoin exchange Binance has launched a new fiat-cryptocurrency exchange in Uganda. The exchange will also be offering a reward of 0.5 BNB to the first 20,000 users that register on the site as part of its promotion in Uganda.

The announcement comes nearly two months after Binance partnered with Crypto Savannah, Made in Africa initiative, and Msingi East Africa to promote economic development in the East African country.

Changpeng Zhao and Yi He founded Binance in 2017 and raised $15 million through an initial coin offering for its ERC20 token BNB in July of the same year.

The exchange plans to move its offices to the island nation of Malta after the implementation of stricter regulations in China and Japan. In January 2018, Binance was the largest crypto exchange with a market capitalisation of $1.3 billion.

Binance in Uganda

BinanceBinance will also offer its Ugandan users a month of zero trading fees when trading goes online. The exchange will announce the opening for trading at a later date.

Users can find out if they have won any rewards by logging into their accounts and accessing ‘Distribution History’ in the Account Center. In addition, users will be required to complete ID verification to be able to withdraw funds from Binance.

Ugandan users will enjoy an exchange that offers fast transactions of up to 1.4 million per second and state-of-the-art storage technology for utmost security. The exchange also provides 24/7 customer support and has a user-friendly interface.

The presence of Binance in Uganda aims to boost financial inclusion in the country, which has increased from 28 percent in 2009 to 54 percent in 2013 according to its national financial inclusion strategy 2017-2022.

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LINE Corp to Launch Cryptocurrency Exchange BITBOX in July for Global Trading

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BitBox
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The developers of popular messaging app LINE and LINE Group’s cryptocurrency and blockchain company LVC Corporation have announced that they are set to launch a new cryptocurrency exchange called BITBOX in July 2018. The Japan-based firm made the announcement during the LINE Conference 2018 held in Tokyo.

The New BITBOX Exchange

BITBOXBITBOX will offer over 30 high-demand cryptocurrencies to users globally with the exception of Japan and the US. The exchange will trade coins such as bitcoin, ether, litecoin, and bitcoin cash while charging low trading fees of 0.1 percent. BITBOX will support 15 languages, according to the company press release.

The selected cryptocurrencies for the exchange have undergone an extensive screening exercise and have been picked by an internal committee, promising users a convenient and safe trading experience. LINE will also incorporate its top security standards to the cryptocurrency exchange.

LINE Corporation CEO Takeshi Idezawa said:

“As a key part of LINE’s new financial services, BITBOX shows our commitment to fulfilling the growing demand for more diverse financial options. With BITBOX, LINE users will be able to access cryptocurrencies more easily, while also being assured of state-of-art security measures to protect their assets.”

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Nigerians Have Invested Over $5m in Cryptocurrencies Despite Regulator Warnings Says KureCoin Hub

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Nigerians Invest in Cryptocurrencies

Nigerians have invested over five million US dollars in the cryptocurrency market in the last couple of years according to data from Nigerian cryptocurrency platform KureCoin Hub.

The data shows that Nigerian retail investors are investing heavily in the cryptocurrency market despite warnings from the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) against investing in an unregulated market.

KureCoin Hub’s co-founder and CEO Tega Abikure has criticised the stance regulators have taken and argues that the country will lag behind as other countries enjoy the benefits of blockchain technology and cryptocurrencies. Abikure told New Telegraph:

“It is not a matter of whether the government likes it; it is about whether they need it. I am not sure the internet was liked when it first came. […] It is not a matter of whether they are going to embrace it; it is about when they are going to do so.”

Abikure observed that other countries such as Uganda and South Africa have already taken steps towards adopting blockchain technology while Kenya is pushing forward with a functioning blockchain taskforce.

“Nigeria is being left behind,” he noted.

The Blockchain as a Source of Foreign Direct Investments

Abikure also believes that blockchain technology could be a major source of Foreign Direct Investments (FDIs) in the next five to ten years. In addition, he is of the opinion that a lot of money is being made in cryptocurrencies on the continent with most of it leaving Africa’s economy.

On one of the benefits of blockchain technology, he said: “[The blockchain] is completely transparent and cannot be changed; it can be used to create a decentralised system of payment where the taxpayer had an unhindered access to the collector which is the government. It enhances revenue collection and removes the challenges of remittances.”

Blockchain technology can also improve the banking sector, the electoral process, the use of donations in charitable projects, and the supply chain, among many other use cases.

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