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Weekly Roundup: Kenyan Digital Service Tax Will Not Affect Crypto Adoption

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Digital Service Tax

In this week’s news roundup, you will learn about the new Digital Service Tax in Kenya and what it could mean to crypto companies. We have also highlighted other top crypto stories from Africa.

Kenyan Digital Service Tax Will Not Affect Crypto Adoption

The Digital Service Tax (DST) in Kenya has been in effect since January 1, 2021. The tax affects anyone that derives income “from services offered in the digital marketplace.” Some of the products that the tax authority is currently targeting are event tickets sold online, e-books, subscription-based media, and movies.

Kenyan bitcoin policyAt the moment, it is unclear whether crypto companies will be part of the 1000 firms the taxman is targeting. Even if they are, however, stakeholders do not think the tax will deter crypto adoption in the country.

Speaking to Cointelegraph, the country representative of the crypto exchange Bitzlato said:

“With regards to it having a negative impact on crypto adoption in Kenya, I do not believe so as there are so many factors that are driving the rapid growth of crypto in East Africa and the youth are on the forefront pushing this.”

Individuals and companies will pay 1.5 percent of the gross transaction value as the Digital Service Tax. According to the Kenya Revenue Authority (KRA), the Digital Service Tax affects both residents and overseas companies.

“For residents and companies with a permanent establishment in Kenya, the Digital Service Tax will be an advance tax that they will offset against the income taxes due in the course of the financial year. For non-residents and companies without a permanent establishment in the country, the Digital Service tax will be a final tax,” KRA stated in a publication.

That said, crypto regulation in Kenya still seems a far way off. Nevertheless, a regulatory sandbox is in existence. It accepts blockchain companies but does not admit companies dealing with cryptocurrencies.

Binance to Hold Blockchain Week in February

Starting February 1, 2021, Binance will hold a virtual conference dubbed “Binance Blockchain Week.” The five-day event will include live panels, keynote speeches, and a hackathon.

Speakers will include Binance CEO Changpeng Zhao, Chainlink Co-Founder Sergey Nazarov, and the Co-Founder of the Acala Network, Bette Chen.

You can register for this event here.

Electroneum’s Expansion Plans Face Barriers

As Electroneum expands electricity and airtime top-up services with crypto to more African countries, it has come across a significant challenge. According to the head of business development Nigel Pooley, mobile network operators and electricity companies are reluctant to embrace crypto.

“There is very little appetite for crypto amongst these two industries. […] They believe the risks have yet to outweigh the benefits,” he told Cointelegraph.

As they pursue direct partnerships with mobile network operators and electricity companies, Electroneum is working with third-party agents in Africa. These agents are crypto-friendly, hence allowing them to facilitate ETN-based airtime subscriptions and bill payments. ETN is the company’s cryptocurrency.

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Weekly Roundup: Standard Bank Group Becomes First Hedera Node Operator in Africa

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Standard Bank South Africa

In this week’s news roundup, we will highlight the partnership between Standard Bank Group and Hedera Hashgraph, and more.

Standard Bank Group Becomes First Hedera Node Operator in Africa

Standard BankStandard Bank Group has become the first Hedera node operator in Africa. The South African bank has also become a member of the Hedera Governing Council.

According to the bank, the partnership is part of its goal to facilitate cross-border trade on the continent using DLT.

“As an organisation, we have established that blockchain technology can track and leapfrog legacy issues that prevent a seamless and transparent payment experience for the customer, which ultimately enables cost savings for all stakeholders,” comments Adrian Vermooten, Standard Bank’s Chief Innovation Officer.

CEO of Hedera, Mance Harmon, said there is a “strong interest from companies” in Africa to leverage DLT for use cases like healthcare, identity, and supply chain.

Pilot Stage of Akoin Wallet Deployment in Kenya Is Now Complete

Akoin LaunchThe pilot stage of the Akoin wallet implementation in Kenya is now complete. The Akoin project rolled out the pilot phase at the Mwale Medical and Technology City (MMTC).

“[We have used] Akoin (AKN) successfully to perform payroll, shopping, and dining transactions at MMTC. [Furthermore, we] piloted the Akoin wallet for performing payment transactions at Hamptons hospital since November 2020. We will fully implement Akoin at MMTC after the end of the current pilot program in July. By the end of 2022, Akoin will be the exclusive blockchain payment platform at MMTC,” MMTC wrote in a report.

Senegalese-American singer Akon is behind the Akoin project. The project will drive the use of the Akoin token at MMTC and Akon City, which is under construction in Senegal. At MMTC, users will utilise Akoin at retail stores, in payroll payments, and to pay for plane tickets.

The project will use lessons from the MMTC implementation as a blueprint for expanding token use across the continent, according to co-founder Lynn Liss. Moreover, the project plans to roll out a physical card linked to the Akoin wallet. The card will enable customers to transact across 40 million merchant platforms globally.

Tesla Makes More Profit on Bitcoin Than 2020 Car Sales

According to Wedbush Securities, a US research firm, Tesla has profited more from its $1.5 billion bitcoin investment than its 2020 car sales.

The firm’s analysts estimate that the electric car company has already made a profit of about $1 billion. This is in contrast with the $721 million profit Tesla reported for the 2020 fiscal year. Note that the firm is making this estimate on the assumption that Tesla has not sold its bitcoin.

Wedbush analysts believe Tesla’s bitcoin investment will have a ripple effect. More companies could also invest in bitcoin or start accepting bitcoin payments.

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Weekly Roundup: Jack Dorsey and Jay-Z Announce Blind Bitcoin Trust for Africa and India

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Africa

In this week’s roundup, you will learn about Jack Dorsey and Jay-Z’s Blind Bitcoin Trust dedicated to Bitcoin development in Africa and the biggest crypto investment scam of 2020.

Jack Dorsey and Jay-Z Announce Blind Bitcoin Trust for Africa and India

The CEO of Twitter and Square, Jack Dorsey, has announced a Bitcoin Trust with American Rapper Jay-Z. The two announced the initiative through a tweet that garnered over 23,000 likes.

Dorsey and Jay-Z are giving 500BTC to the trust, which will fund bitcoin development in India and Africa. Many companies and organisations commented on the tweet probably with the hopes of becoming beneficiaries of this fund. They include BitPesa, Blockchain Association of Kenya, and SpaceBox.

The announcement came hours after an anonymous source claimed that India would ban all cryptocurrencies. Moreover, the Central Bank of Nigeria recently ordered all banks in the country to stop facilitating payments for crypto exchanges.

According to the tweet, the trust needs three board members to start. Also, Dorsey and Jay-Z will not take part in the leadership of the trust.

Chainalysis Names MTI as 2020’s Biggest Crypto Investment Scam

Chainalysis has named the Mirror Trading International (MTI) scheme as 2020’s biggest crypto investment scam. The company made the declaration in a recent review of cryptocurrency-related crimes.

MTI conducted a crypto investment scheme in South Africa where users deposited a minimum of $100 in bitcoin. The company claimed to use AI trading software to grow the investments of its customers. Additionally, MTI guaranteed customers daily returns of 0.5 percent.

“Mirror Trading International is another example of why the industry must spread the word that algorithmic trading platforms promising unrealistically high returns are nearly always scams. When cryptocurrency exchanges and other services learn of these scams and receive their cryptocurrency addresses, they should discourage users from sending funds to those addresses or at least warn them that financial losses are highly likely,” said Chainalysis.

The Financial Services Conduct Authority (FSCA) in South Africa has been investigating the company since last year. They found that the company was using false trade statements and did not declare losses. Furthermore, the FSCA discovered that the company could not account for more than 16,000 bitcoin of claimed investors’ funds.

Bitcoin Crosses the $50,000 Mark

Project Khokha 2This week, bitcoin reached yet another milestone by crossing the $50,000 mark.

The bull-run comes at a time when Tesla bought $1.5 billion worth of bitcoin. Additionally, Mastercard announced that it will bring crypto to its network.

Tesla’s move could inspire other companies to consider cryptocurrencies. For instance, the CEO of Uber, Dara Khosrowshahi, told CNBC that the company is considering accepting bitcoin payments.

“I think bitcoin is a much more stable asset class today than it was three years ago. It used to be dominated by leveraged retail traders […] on international markets with a lot of leverage. “Starting in March of 2020, you saw institutions start to arrive, and I think in 2021 you are going to see that trend continue,” Michael Saylor, CEO of MicroStrategy, told CNBC program Street Signs Asia.

Unlike the 2017 bull-run where bitcoin lost over 80 percent of its value the next year, bitcoin appears to be keeping the momentum this time around.

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Weekly Roundup: South Africa Launches Project Khokha 2, CBN Gets Sued Over Crypto Ban

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Project Khokha 2

The crypto capital markets saw another interesting week where ETH hit a new all-time high past $1800. Additionally, South Africa launched Project Khokha 2 while Mastercard announced plans to bring crypto on its network and the Central Bank of Nigeria faces a legal pushback following last week’s crypto banking ban.

South Africa Launches Project Khokha 2

The Intergovernmental Fintech Working Group (IFWG) Innovation Hub has announced the launch of Project Khokha 2. The project will investigate the policy and regulatory implications of tokenisation in the financial markets.

“Project Khokha 2 will issue, clear, and settle debentures on DLT using tokenised money in a minimum viable product (MVP) to inform policy and regulatory reflections. Industry participants will be able to purchase the debentures with a wholesale central bank-issued digital currency (wCBDC) and a wholesale digital settlement token (wToken). The wToken can be seen as a privately issued stablecoin used for interbank settlement,” said IFWG in a statement.

The participants of this project are Absa, Nedbank, First Rand Investec, Standard Bank, the Johannesburg Stock Exchange, and Strate. Furthermore, IFWG has given Accenture the task of creating the wCBDC, while Block Markets Africa will develop the wToken and produce DLT-based debentures. Additionally, Deloitte will document the insights of Project Khokha 2.

The first Project Khokha aimed to explore the feasibility of a Central Bank Digital Currency as an electronic legal tender.

Civil Society Organisation Sues CBN Over Recent Bank Payments Ban

buy bitcoin in nigeriaThe Digital Rights Lawyers Initiative, a civil society organisation, has sued the Central Bank of Nigeria (CBN) for banning banks from facilitating payments for crypto exchanges.

The society argued that CBN does not have the power to prohibit financial institutions from handling crypto transactions. Furthermore, it highlighted that the Securities and Exchange Commission (SEC) in the country had declared digital assets legal.

As a result, the lawyers are seeking “perpetual injunction restraining [CBN] from regulating and/or further regulating virtual currencies/ cryptocurrencies in Nigeria.”

Irene Chukwkuelu filed the case in court on behalf of the organisation on February 8, after CBN imposed the ban on February 5.

Mastercard to Bring Crypto On Its Network

Mastercard Inc. has said that it is planning to provide support for several cryptocurrencies on its network. Presently, Mastercard offers crypto cards to its customers. However, these transactions do not go through its network.

“This is a big change that will require a lot of work. We will be very thoughtful about which assets we support based on our principles for digital currencies, which focus on consumer protection and compliance,” Mastercard stated.

The company made it clear that it is not recommending people to start using cryptocurrencies. Additionally, it specified that introducing crypto support on its network will allow customers, businesses, and merchants to move digital value however they want.

Mastercard will join companies like Tesla and PayPal that are embracing cryptocurrencies. Recently, Tesla bought $1.5 billion of bitcoin and announced it would start accepting bitcoin payments. Also, Visa announced plans to launch an API for banking with bitcoin.

SARS Clamps Down on Non-Compliant Crypto Traders

The South African Revenue Service (SARS) is requesting taxpayers that hold cryptocurrencies to reveal their trading activities. This is according to tax firm, Tax Consulting South Africa, which acquired enquiries from taxpayers that had received audit requests.

SARS also asked the taxpayers to send information detailing their reasons for buying crypto, a letter from the trading platform confirming the investment, and bank statements.

“This would have been reasonably expected by the taxpayers, if they had made any disclosure of cryptocurrency-linked trading amounts in their returns, along with the rental amounts and certain investments that were indeed disclosed to SARS,” said Tax Consulting South Africa. “However, in this case, we had explicitly confirmed that the taxpayers had not, to their knowledge, ever effected a cryptocurrency-related transaction.”

Nevertheless, the move shows that SARS is actively clamping down on non-compliant crypto traders who could pay a fine or serve up to two years in prison. In 2018, SARS carried out an exercise to identify and track the transactions that crypto traders were performing.

The cryptocurrency tax in South Africa requires taxpayers to declare all crypto-related taxable income. That includes crypto to Rand transactions and crypto to crypto transactions.

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