The South African Reserve Bank is putting together a task team to investigate and monitor cryptocurrencies such as Bitcoin.
Cryptocurrencies have taken he world – and South Africa – by storm. They can be viewed as a medium of exchange, much like the traditional paper money we use on a daily basis. The key difference, however, between paper money and digital currencies is that digital currencies are not regulated by a central government bank.
As cryptocurrencies are not managed by a centralised bank, this means that they are not regulated. This also means they are more vulnerable to fraud.
In March this year, more than 27 000 people across the globe fell victim to one of the world’s largest Bitcoin scams. The Hawks have confirmed an investigation into a bitcoin company called BTC. Thousands of people around the world invested in cryptocurrency with BTC, and an amount of $50-million was lost.
According to Bitcoin.com, an estimated $23-million is stolen through cryptocurrency on a daily basis. An approximate R16-billion has reportedly been lost thus far in 2018.
On Tuesday, Twitter banned cryptocurrency adverts. Google will enforce a total ban of cryptocurrency adverts from June, while Facebook has already started restricting cryptocurrency-related adverts. Although advertising from cryptocurrency traders have created huge revenue for the platforms, the risk which is associated with promoting fraud is not worth the risk.
Director of financial consultancy firm Kapronasia, Zennon Kapron, told Reuters that it is an impossible task for anyone to keep tabs on whether specific cryptocurrencies are genuine or fraudulent.
Google Chrome has also announced that it will no longer accept extensions to mine cryptocurrency, after reporting that 90% of all extensions with cryptocurrency mining scripts do not comply with its policies.
The South African Revenue Service (SARS) has also announced that it will continue to apply normal income tax rules to cryptocurrencies and expects affected taxpayers to declare cryptocurrency gains or losses as a part of their taxable income.
SARS said that the onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year which it is received or accrued, and failure to do so could result in interest and penalties.
‘Bitcoin for dummies’ explains exactly how this cryptocurrency works (source: Youtube)