South Africa Opens Consultation to Reform Law and Include Payments with Cryptocurrencies

More than half of the population receives information about cryptocurrencies. Some South Africans even use cryptoactives to pay their penalty fee. However, this method of payment does not appear in national legislation

South Africa, the country in which citizens can pay their fines with Bitcoin, is among the countries most friendly to cryptoactives, as well as being one of the countries with the most Google searchesabout Bitcoin topics.

On December 5^th, the South African authorities announced that they had opened a period for public consultation on the possible changes to be made to the laws currently in force in the country that could regulate payment systems with cryptocurrencies to include them as one of the current methods of payment.

On the Government of South Africa’s website and theReserve Bank of South Africa and the National Treasury’s official page, a document entitled “Review of Law 78 of the National Payment System of 1998” is available to the citizens, so that the interested ones analyze the content and send their opinions, by email, until February 28^th, 2019.

The main objective is for the Government of SouthAfrica to review the laws that have become outdated in terms of new payment methods, in order to include regulations for the new existing digital currencies that are not regulated, including cryptocurrencies and the systemsthat arise on blockchain and in the fintech companies.

This decision of the South African Government to reform the law of the payment system seems to indicate that in lieu of creating new laws to regulate the cryptoactive sector, the intention is to adapt the laws in force to the ecosystem.

In April, the authorities of the Public RevenueService of South Africa (SARS) assured that they would soon take into account transactions with cryptocurrencies for the tax rules that were already in force in the country. The government agency explained that there is a very complete legal framework in South Africa; hence, it did not consider it necessary to write a separate interpretation on the subject.

In November, a survey revealed that 69% of SouthAfricans know cryptocurrencies and 39% of them own cryptoactives. The SouthAfrican Government considers that the outdated laws and the lack of regulation of this sector can generate problems since it is a gateway to the economy. The statement adds that, because changes in technology are constant, laws must be flexible too.

The payment industry is moving towards a digital era and financial technology is also moving forward with great strides. Therefore, the regulatory and legislative framework must be flexible and adaptable to these changes and provide an enabling environment for innovation to thrive.

This does not prevent the Government from making sure to avoid scams. This year, SARS was in charge of tracking transactions in order to avoid tax evasion.

For the Government, the development of global policies related to financial stability must take into account a law reform, in addition to international standards and the demands of institutions such as the WorldBank and the International Monetary Fund.

By María Rodríguez