Govt and the regulators have finally decided to pull the plugs on the decentralized crypto and choose to regulate every centralized exchange. Now after decades passed they have a new asset called blockchain to regulate and give license too. So crypto can't fly without the regulation as we are passed the pandemic excuse and govt is now active outside the healthcare issues.
So in case of the south africa, there has been rising number of the incidents of the scams. And they want to have control over the scams and the variety of the attempts to damage the legal tender of the nation. And they want to have control over the same so they are offering the licenses to exchanges.
In short, when the exchanges keep the trade history, it'd be giving the govt enough leverage to issue the tax on the consumers. And there would be passage of taxes on the exchanges too. Now that thing out of the way, many companies have applied to get a license.
There are 128 applications sent and total 36 have approved so far fo the crypto exchange.
Financial Sector Conduct Authority of South Africa
South africa has its own version of SEC. And they regulate variety of the assets in it. Including retirement accounts, stock market, crypto market, forex assets and now even the crypto. You can learn about the FSCA here. They also have variety of the documents and consultations made on crypto.
One such document that I recently found out about the crypto regulation and the consultation here. This authority has already imposed regulations on the banks and the exchanges and they are now allowing only the licensed banks to deal with the crypto.
Taxation of the Digital Assets and the Crypto Income
Here lies the problem for most of the people. Decentralized world expects there should be no regulation and no taxes. But govt and the local public management requires the taxation to pay for the govt jobs and the variety of task that they take out. And so they impose the taxes even on crypto.
So why does it have more taxes on the crypto? Every govt is not friendly out there with the crypto. And as the crypto competes with the legal tender hence they are taxed more in this space. And another thing is that if you are planning taxation then even South Africa the taxation would be there in the higher amount depending on how much process from the trade to bank happened.
License to 36 Crypto Exchanges
South africa is also being very much careful when handing over the taxation rights and the crypto exchange license to other companies. And so there are around 128 licenses application were accepted by the south africa FSCA. And out of which only 36 licenses were approved by the govt.
This goes to show that it would take a bit of effort and time for other applications to get approved in the South Africa. And if market expands then maybe the companies would even demand the nation to come up with the CBDC and that would be like imposing better regulations and the rules.
It's been decade in crypto and new generation in the govt around the world knows what crypto is and they are ready to tax this digital asset in near future.
South Africa is being welcoming to the Fintech companies in this space. However they are not handing out licenses that easily and they do their research on these applications and only legit ones are passed and this goes to show the digital assets, exchanges and the consumer trades are now taxable and regulated from now onwards.