South African government sets up crypto assets regulatory working group

The government of South Africa has set up a crypto assets regulatory working group to look into all the aspects of cryptocurrencies and blockchain technology, BusinessDay reported.

In response to a parliamentary question by Freedom Front Plus MP Wouter Wessels, finance minister Tito Mboweni said that the initiative is aimed at developing a “cohesive governmental response to cryptocurrencies and a unified intergovernmental regulatory framework.”

The working group will comprise of representatives from the Financial Intelligence Centre, Financial Sector Conduct Authority, Treasury, the Reserve Bank and the SA Revenue Service (SARS).

As the current income tax return forms do not have the provision to declare capital profits from cryptocurrency trades, Mboweni said that SARS has been unable to trace the number of declarations related to capital profits on cryptocurrencies accurately. However, some taxpayers have made declarations regarding crypto trades as a form of “‘other trade income’ or ‘other trade loss’,” he noted.

Mboweni said that authorities are currently considering revising tax forms on these lines.

“[W]ork is under way within Sars to consider the amendment of the tax forms for the 2019 tax season in order to cater for the description of other assets (which will include cryptocurrencies) by means of a specific description field on the form,” he said.

SARS applies normal income tax rules to digital currencies. Last July, it released the Taxation Laws Amendment Bill, 2018, which included proposed amendments to the treatment of cryptocurrencies for income tax and value added tax (VAT) purposes.

“It is anticipated that, following broad industry comment and participation, the crypto assets regulatory working group will be ready to release a final research paper on the subject during the course of 2019,” Mboweni said.

In the United States, New York Assemblyman Clyde Vanel confirmed the establishment of a cryptocurrency task force which will “provide the governor and the legislature with information on the effects of the widespread use of cryptocurrencies and other forms of digital currencies and their ancillary systems in the state.”