According to the South African Reserve Bank (SARB), individuals may not use cross-border or foreign exchange transfers to purchase crypto assets.
According to SARB, this is because the Financial Surveillance Department cannot approve such transactions from an exchange control perspective. However, individuals can purchase crypto assets from abroad up to the amount of ZAR 1 million ($70,000) per year. This is extended to ZAR 10 million for an individual foreign capital allowance.
Individuals may only make these purchases with the use of a Compliance Status (TCS) PIN. This is issued by the South African Revenue Service (SARS). Accordingly, a local authorized dealer assists individuals using the TCS PIN to verify the taxpayer’s tax compliance status. Customers must also sign a declaration stating they are aware of and will not exceed the transaction limit.
Additionally, individuals may not use another’s discretionary allowance through the granting of a ‘loan’ or any other similar agreement. According to the SARB, this is considered an illegal simulated transaction, circumventing the provisions of the Exchange Control Regulations.
SARB position on crypto
These statements were made in the context of the SARB’s policy on cryptocurrency assets. Officially, South Africa’s central bank “does not currently oversee, supervise or regulate crypto assets, but is continuing to monitor this evolving area.”
The SARB notes the crypto assets are not legal tender in South Africa, so merchants can refuse any payment made with them. The SARB added that they do not guarantee or back crypto assets because they operate independent of any central bank authority.
South Africa’s central bank highlighted that there are currently no dedicated laws or regulations governing the use of crypto assets in South Africa. As a consequence, no regulatory compliance requirements exist for the trading of these assets. Any legal protection or recourse to users accordingly depends on general common law principles.
Lack of recourse
These statements echoed South Africa’s Financial Sector Conduct Authority (FSCA). Last week, the FSCA said it could not act on Africrypt’s alleged theft of $3.6 billion in bitcoin.
Despite looking like a Ponzi scheme, South Africa’s financial regulator said all it can do is review complaints. This is because “crypto assets are not regulated in terms of any financial sector law in South Africa and consequently the FSCA is not in a position to take any regulatory action.” Last week, brothers and founders of the Africrypt platform, Ameer and Raees Cajee, disappeared along with $3.6 billion in bitcoin.