Crypto in Africa: Nigerian politician vows support as Uganda seeks crypto regulatory framework

It’s an interesting week for the cryptocurrency space in Africa this week. The continent has seen more governments profess their support for cryptocurrencies publicly, while others are planning to create a regulatory framework for the market.

Nigeria opposition leader promises to support blockchain, cryptos

Atiku Abubakar, the former Nigerian vice president and current opposition presidential candidate, promised his supporters that, when elected, he would work to create blockchain and cryptocurrency regulation for the country.

According to local reports, Abubakar made the announcement while launching his policy document ahead of the February 2019 elections. In the policy, he explains that he plans to use blockchain and cryptocurrencies to help improve the country’s economy.

In his policy document titled ‘Get Nigeria Working Again,’ Abubakar also explain that this government will, in addition, create a regulatory framework for the industry. He stated that regulation would help build the industry, in turn, creating thousands of employment opportunities as well as generating income for the government.

He asserted, “My mission is to make sure that Nigeria’s economy is reactive to the challenges of the 21st-century knowledge economy by keeping up with the amazingly dynamic in the technological pace.”

The crypto ecosystem in Nigeria has been on the rise in the last few years and the country is among the top crypto markets in Africa. If Abubakar gets elected as president, the crypto space in the country stands to see tremendous growth. Despite the current crypto prices and challenges, it seems that Abubakar is optimistic about the cryptocurrency industry.

Uganda has plans for new crypto regulations

The cryptocurrency market in Uganda has shown great promise ever since Binance set up shop in the country. Though not as active as South Africa, Nigeria or Kenya, the market is quickly picking up the pace. With this new development, the government in Uganda has decided to set up regulations to govern all crypto operations. According to reports, the government seeks to establish rules that will protect its citizens from illegal activities in the space.

Thousands of Ugandans have fallen victim to one crypto scam or another and many have lost vast sums of money in the process, local news outlets reported. The government fears the economy in the country might become unstable if this trend continues.

According to David Bahati from the Planning and Finance Ministry, his ministry has finished drafting the bill that pertains to national payments. The bill will be presented before Parliament next month for debate and approval. The bill has already been approved by the Cabinet in Uganda and is believed to shine a light on what citizens can do when they find themselves victims to fraudulent activities in the crypto space.

South Africa seeks to regulate crypto through taxation.

In April 2018, the South African Reserve Bank stated that cryptocurrency is not considered “legal tender” in South Africa. Later, authorities in the country imposed tax regulations on crypto owners that require them to declare their gains and losses concerning their transactions involving cryptocurrency.

In July, the National Treasury published the draft Taxation Laws Amendment Bill (the Bill) for the public, the Treasury’s first attempt to regulate the use of cryptocurrency in the country. It proposes changes to both the Income Tax Act and the VAT Act. One of the proposed changes is the inclusion of cryptocurrency in the definition of “financial instrument” in the Income Tax Act.

Experts claim that the new bill will not be favourable for the crypto space in the country. According to the reports, Section 22 and section 22(1)(a) of the Income Tax Act limits the benefits crypto traders get from valuing their undisputed cryptocurrency using the valuation method contemplated in section 22. In addition, Section 11 also represses investment in FinTech companies in South Africa.

The Treasury has also suggested that the “issue, acquisition, collection, buying or selling or transfer of ownership of any cryptocurrency” be added to the definition of “financial services” in Section 2 of the VAT Act.

While some countries seem to be content with not innovating in the crypto space, it is becoming more apparent that African nations see the true value of digital currency in global economies.

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Crypto in Africa: Crypto market in Africa expands amid regulatory pressure

Africa is poised to become the next hub for blockchain and cryptocurrencies. The continent has experienced significant growth of cryptocurrency-related activities, and more countries are opening up their doors to crypto innovations and investments; however, the growth has suffered a great deal of opposition from authorities through various regulations. Despite the pressure, though, there are more crypto exchanges, tokens and wallets across the continent.

South Africa

South Africa is leading in blockchain and crypto activities in Africa and now has many blockchain-based startups, exchanges and wallets. The cryptocurrency community in South Africa is actively involved in growing the crypto market in the region. While the crypto community is thrilled by the new technology, authorities are finding ways to control these operations.

In 2014, the South Africa Reserve Bank (SARB) published information that hinders cryptocurrencies to be considered as valid legal tender. Despite the publication, more people continued to invest in Bitcoin BCH, Bitcoin Core (BTC) and other cryptocurrencies. Even when the South Africa Revenue Service started taxing cryptocurrencies in the country, cryptocurrency numbers kept on rising.

Kenya

The crypto market in Kenya has seen exciting developments. From the creation of BitPesa to the recent innovation that allows mining companies to use solar panels to mine crypto, the country is increasing its crypto impact in Africa. Authorities in Kenya, however, have not been forthcoming in stating their stance in regards to cryptocurrencies. As reported previously, the country’s finance minister, Henry Rotich, was given two weeks back in July to decide the regulations for cryptocurrencies in the country. Several months have passed, and there is still no regulatory system in the country.

Uganda

Uganda is catching up with Kenya, South Africa and Nigeria. Many citizens were unbanked for a long time before digital currencies were introduced to the country. Binance, one of the biggest cryptocurrency exchanges in the world, recently launched a platform in Uganda and, in the last few months, the exchange has had over 40,000 users register on its platform.

Bitcoin Trading Platform (BTN) thrives in Namibia

BTN has adopted know-your-customer and anti-money laundering requirements by the Bank of Namibia in order to provide crypto services in the country. The emerging marketplace wants to survive and create a healthy relationship with financial authorities despite the ban.

According to Tshuutheni Emvula, co-founder and CEO of BTN, the company wants to provide a safe and secure on- and off-ramp for crypto for the emerging crypto community in the country.

BTN wants to create an environment that enables business people and customers to stay digitally connected to the world. Emvula explains that it will take a long time before the company can entirely create such an environment. He states that the first step to attaining this dream is making it possible for individuals in the country to directly own cryptocurrencies.

BTN, which was launched in March of this year, terms its self as a non-speculative Bitcoin Core (BTC) marketplace. The platform does not work as an exchange; rather, it allows buyers to transfers local Namibian dollars to a BTN bank account number in exchange for BTC. The clients then get the crypto sent to an address of their choice, a process that can take up to 72 hours for clients to receive their digital assets.

BTN does not store or keep any BTC on behalf of users. The platform also does not open order books, which allow users to trade BTC with each other. This has enabled the company to provide crypto services despite the ban imposed in 2017. That ban prevents local shops from pricing or accepting cryptocurrencies in exchange for goods and service, but does not have specific penalties attached to it.

Emvula explains that their operations are well within the stipulated laws. He explains that the ban does not mention that people are not prohibited from trading cryptocurrencies. He hopes their crypto space in the country will grow to allow the diversity that comes with the new technology.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Crypto in Africa: South Africa wants to hike taxes on blockchain-related activities

Blockchain and cryptocurrency adoption in Africa is steadily increasing with new countries in the continent getting onboard. Countries like Uganda and Tanzania are slowly catching up with others, such as Nigeria, South Africa and Kenya.

Tanzanian gov’t looks to increase blockchain innovations

The Tanzanian government recently invited academics and researchers to help produce favorable blockchain regulations that will help grow the country and its economy.

According to reports, Tanzania is looking to increase blockchain usage in the country. While speaking at the second Annual ICT [Information and Communications Technology] Professionals Conference 2018 in Dar Es Salaam, Dr. Jim Yonazi, the Deputy Permanent Secretary Minister for Works, Transport, and Communications, reached out to experts and researchers in the industry to help think of new use cases for blockchain in the country in order to help formulate the necessary regulations.

Dr. Yonazi stated, “Although the government has a national blockchain committee, I also ask experts and universities to conduct thorough research on this technology to understand its potentials and challenges before we fully adopt it’s in the country.”

Tanzania’s stance on cryptocurrency has been somewhat optimistic. In December, the central bank in the country announced that it was taking measures to study the industry to create a legal framework. Despite having no clear legal structure on blockchain and its technologies, Tanzania still has time to join the wave on the blockchain.

Unlike neighboring countries Kenya and Uganda, the blockchain and cryptocurrency community in Tanzania has been entirely dormant. It also does not have a local cryptocurrency exchange and relies on services from international exchanges. Despite the slow growth, Tanzania received this past July a first of its kind blockchain technology that tracks aid and support to newly born babies and vulnerable women in the county.

Many hope the call to action will help increase blockchain innovations and cryptocurrency trade in the country.

South Africa proposes regulatory changes that could disrupt FinTech growth

Recently, the National Treasury and the South African Revenue Services (SARS) introduced some changes to the draft Taxation Laws Amendment Bill, which have caused significant concerns among people in the FinTech industry. The authorities suggested that cryptocurrency should be categorized as a financial instrument in the draft bill.

According to Robert Hare, a senior associate at the Bowmans law firm, the proposed “small changes” are not so small, but stand to change a lot in the cryptocurrency industry. The lawyer stated that if the change becomes law, it will prevent startups, companies and incubators in the county from claiming a significant income tax incentive, otherwise referred to as the research and development (R&D) allowance.

The R&D allowance is a longstanding tax incentive that was created to encourage various forms of innovation in South Africa. This includes the creation and development of computer programs of an innovative nature—which could otherwise include the development of new cryptocurrencies.

Hare further explained that classifying cryptocurrencies as financial instruments do not do proper justice to the skills and work put into developing the digital currencies. He said one cannot compare the work and efforts used to create digital money with works done to form a loan, a share or derivatives, among other things.

The advocate raises concerns regarding why the authorities chose to impose such changes without any explanations. However, authorities claim that classifying cryptocurrencies and financial instruments is meant to help clarify the existing provisions relating to cryptocurrency. Hare and many in the field believe this is a completely new reference and not a clarification.

The proposed change is yet to be implemented. Hare hopes these new changes will not stop inventors making South Africa a hub for FinTech innovation.

SARS began taxing cryptocurrencies earlier this year in April. The authority has been applying standard income tax rules to cryptocurrencies holders who are required to declare cryptocurrency gain and losses as part of their taxable income.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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