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

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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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Weekly Roundup: New Investigation Links Africrypt to MTI, Bitcoin Shoots Past $40k

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This week’s news roundup will reveal the new link investigators have found between Africrypt and Mirror Trading International (MTI). We will also highlight other top crypto stories.

New Investigation Links Africrypt to MTI

Crypto Investigation Bureau (CIB) has found a new link between Africrypt and MTI. These two companies have been at the centre of the recent bitcoin scams in South Africa.

“Some of the same ‘tumblers’ used by Africrypt were also used by MTI,” said Hamilton Cheong, the CEO of CIB.

Money launderers use tumblers to conceal the origin of funds before transferring them elsewhere in small quantities. Chainalysis named MTI the biggest bitcoin scam of 2020. The organisation is currently undergoing liquidation according to local reports in South Africa.

Cheong also thinks that Africrypt was not the victim of a hack as the Cajee brothers claimed. They “perhaps got mixed up with some very bad people,” he stated.

CIB has been working with law enforcement agencies across the globe to investigate the Africrypt matter. The company uses God’s View, a blockchain track and trace system, to look for missing digital assets.

Sokowatch Collaborates with FinX to Offer DeFi-Powered Services in Rwanda

SokawatchSokowatch has collaborated with FinX to offer services powered by Decentralised Finance (DeFi) to informal merchants in Kigali, Rwanda. The initiative will allow these merchants to digitise their transactions, manage cash flows, and plan for their businesses.

The project will kick off with a pilot, which has already onboarded several merchants. To scale the project to thousands of business owners, Sokowatch will get capital by leveraging deposits in the USD-backed stablecoin, Luna.

The goal of the initiative is to provide capital to small business owners that do not have access to formal credit. By helping merchants shift from cash to mobile money and prepayments for DeFi-powered inventory, the two companies believe that they can help boost profitability, resilience, and efficiency for these businesses.

Sokowatch is a company based in East Africa that helps informal retailers to make product orders through apps or SMS. On the other hand, FinX is an initiative of Mercy Corps whose goal is to speed up financial inclusion.

Bitcoin Rises Past $40,000

Bitcoin rose past $40,000 on Monday and Wednesday, creating a frenzy of excitement across the crypto community. Experts think that the recent rally could have emanated from hints that Amazon could accept bitcoin as a form of payment in the future.

According to data on Coinmarketcap, bitcoin hit a high of $40,499.68 on Monday and $40,816.07 on Wednesday. This increase brought the cryptocurrency’s market cap to above $700 billion. The digital asset has, however, dropped below $40,000. At the time of writing, bitcoin was trading at around $39,000.

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Weekly Roundup: Over 17K Kenyan Farmers Get Blockchain-Based Crop Insurance Cover & More

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In this week’s roundup, we will cover several top crypto news. From one of those stories, you will learn that thousands of Kenyan farmers have received blockchain-based crop insurance covers.

Over 17K Kenyan Farmers Get Blockchain-Based Crop Insurance Covers

A partnership between ACRE Africa and decentralised protocol Etherisc has allowed more than 17,000 small-scale farmers in Kenya to get blockchain-based crop insurance covers. The two partners have already processed insurance payouts for some of these farmers. The farmers will pay premiums as low as $0.5 to obtain insurance coverage for crops negatively affected by climate change.

“The solution that we built with our valued partners at ACRE Africa overcomes a number of challenges associated with traditional crop insurance. [Some of these challenges include] delayed payments, high premium costs, and lack of transparency,” said Michiel Berende, Etherisc’s Chief Inclusive Officer.

The project has received funds from Ethereum Foundation, the Decentralised Insurance Foundation, and the Chainlink Community Grant.

DFS Lab Partners With Stellar Development Foundation to Launch a Blockchain Bootcamp in Africa

DFS Lab has launched a call for application for its Blockchain Bootcamp that was launched in partnership with the Stellar Development Foundation (SDF). The Blockchain Bootcamp for African startups will provide early to mid-stage startups with a chance to build on the Stellar network, which is an open-source blockchain for financial products and services.

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The three-day virtual bootcamp will see participants answer key business questions while receiving hands-on guidance and support from DFS Lab and SDF. The companies with the most promising solutions will be awarded prizes between 5,000 to 20,000 USDC. Applications close on August 20, 2021.

Zimbabwe Seeks to Include VASPs in its Securities Law

The Zimbabwean government recently announced its intention to broaden the definition of securities to include Virtual Asset Service Providers (VASPs). VASPs refer to institutions that facilitate the transaction, administration, and safekeeping of digital currencies. Cryptocurrency exchanges in Zimbabwe will, therefore, be regulated under the amended Securities and Exchange Act.

The country’s anti-money laundering laws will also be changed to allow regulatory authorities to deal with the possible abuse of cryptoassets by bad actors. This is the first time cryptoassets are being considered under Zimbabwean law, which suggests that the government is becoming more open to cryptocurrencies as an asset class.

Upcoming Upgrade to Enable Smart Contracts on Bitcoin

legitimate bitcoin doublerAn upgrade that could enable smart contracts to run on the Bitcoin blockchain is imminent. The upgrade, named Taproot, will also improve the privacy of multi-signature transactions and reduce the cost of transacting on the Lightning Network.

Edul Patel, CEO of Mudrex, an algorithmic crypto trading platform, said: “Bitcoin’s Taproot upgrade might just be the key element that would propel it into mainstream finance. The bottom line is the kind of revolution that the Taproot upgrade might bring for Bitcoin is phenomenal.”

The Taproot upgrade received the green light from the bitcoin mining community through a vote. The implementation will take place in November 2021. This is the biggest Bitcoin network upgrade since SegWit in 2017.

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Weekly Roundup: Kenya Asked to Consider Blockchain-Based Elections & More

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Blockchain-Based Elections

In this weekly roundup, we will highlight the call for blockchain-based elections in Kenya and other top industry news.

Kenya Asked to Consider Blockchain-Based Elections

According to local reports, a candidate vying for the electoral commission’s commissioner position has asked Kenya to consider blockchain-based elections.

The candidate, Justus Abonyo, believes that adopting blockchain technology can cut down the cost of elections by up to 300 percent. Abonyo also said that the blockchain will improve election transparency and security. In the past, the opposition political parties have accused the winners of stealing votes.

“The cost of a ballot in Kenya ranges between US$ 7-US$ 25 (Sh700-Sh2,500). If we use blockchain technology, this cost will go down to US$0.5 (Sh50). This is an area I would explore as a commissioner,” he told the selection panel.

Kenya is preparing for a general election in 2022. Currently, the government is hiring a fresh administration to run the upcoming election.

Save the Children Rwanda Partners with Cardano

CardanoSave the Children, a charity organisation, has partnered with Cardano in Rwanda to enable ADA donations.

The Cardano Foundation has developed a payments gateway to make this happen. Hours after rolling out its application, Save the Children received 22,000 ADA, which is about US$ 30,000.

“Through Cardano, Save the Children in Rwanda now has a starter pot of the cryptocurrency ADA which we can deploy to projects for children. But there are also countless possibilities through blockchain. Firstly, the blockchain can directly impact children’s lives through initiatives such as digital school records. Secondly, it can increase our efficiency and transparency as an organisation,” said the Director of Save the Children Rwanda Maggie Korde.

The payments gateway means that the charity organisation can hold and get cardano donations without the need to convert them to fiat money first. The NGO has been receiving bitcoin donations since 2013.

Africrypt Owners Remain On the Run

The brothers behind the latest alleged Africrypto bitcoin scam in South Africa remain on the run. According to an article on Cointelegraph, the Cajee brothers left South Africa in December 2020 and have been traced to various hotels in the UAE.

The Financial Sector Conduct Authority (FSCA) is also not in a position to take any regulatory action because crypto assets are unregulated in the country.

“At this stage, we have only found evidence of crypto-asset transactions. Currently, crypto assets are [unregulated] in terms of any financial sector law in South Africa and consequently, the FSCA is not in a position to take any regulatory action,” FSCA said.

However, the authority said that it has conducted investigations that indicate Africrypt was running a Ponzi scheme. Investors have taken legal action in an attempt to recover their funds. Only time can tell whether this effort will have a positive outcome.

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