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
The 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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