Regulatory Guidance Unit

Regulatory Guidance Unit

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Demystify regulation

Financial sector policies and regulations are complex. The Regulatory Guidance Unit exists to help market innovators resolve specific questions regarding the policy landscape and regulatory requirements.
Do you have a question on fintech or innovation-related financial sector regulation?
We do this by providing a central point of entry for market innovators to submit enquiries related to fintech and innovation-oriented policies and regulations. Responses from the Regulatory Guidance Unit will integrate perspectives from relevant financial sector regulators, eliminating the need to contact multiple regulators. Guidance provided is non-binding and innovators are encouraged to seek formal legal advice on complex enquiries.

FAQs

Issuing a mobile money wallet involves the collection or accumulation of money from customers and providing a digital/electronic means to access and use the money in a convenient way (i.e. using a mobile device). When a firm collects money from customers with an agreement to repay the money as and when required by the customer (as a regular feature of its business), the activity is seen as deposit taking. A company that is involved in deposit taking is considered a bank and therefore require a banking licence to perform this type of activity (as outlined in the Banks Act, Act no.94 of 1990).

However, a firm that does not intend on performing deposit taking, but only providing technical services, where the funds are not held, are allowed to provide payment related services. Section 52 of the Banks Act allows for other entities, referred to as non-banks, to enter into arrangements with banks that may allow them to offer payment-related services in partnership with a bank. Non-banks that provide these payment-related services are considered system operators or third-party payment service providers in terms of Directives 1 and 2 of 2007. Specifically, system operators provide technical services (where no funds are held) by processing or routing payment instructions between banks, whereas third party payment providers receive payments from the public for payments that are due, such as a bill payment for electricity. In the delivery of such payment services where funds are held, the funds are due to a third party and therefore not regarded as deposit taking and do not require a banking license.

System operators require authorisation from the Payments Association of South Africa (PASA) in terms of the entry and participation criteria as defined in the Directive 2 of 2007 for System Operators, whilst third party payment providers are not authorised, but must be registered at PASA by the bank (sponsoring/ acquiring bank) introducing them to the payment system.

For additional information, please reference:

To learn more, please check out our three-minute “Regs Explained 01: Licenses for mobile money wallet solutions in South Africa” video with South African Reserve Bank Senior Payment System Analyst Ayn du Bazane here https://www.youtube.com/watch?v=kJZxSoVvk4E.

The Intergovernmental Fintech Working Group is in the process of drafting a revised policy on crypto assets and crypto asset related activities. The IFWG recently published a draft position paper, which is under revision after a period of public comment. The final paper will set the policy position for South Africa on crypto assets which will lead to the development of a regulatory regime. For additional information, please reference:
IFWG CAR Working Group Position Paper on Crypto Assets: https://www.ifwg.co.za/wp-content/uploads/IFWG_CAR_WG-Position_Paper_on_Crypto_Assets.pdf
In terms of the exchange control rules, non-residents who have introduced crypto assets to South Africa for sale locally and who want to transfer the sale proceeds abroad will be unable to do so, since no foreign exchange was introduced into South Africa through the financial system. The applicable exchange control policy is outlined in section G. (C) (i) of the Currency and Exchanges Manual for Authorised Dealers. South African residents are allowed to transfer funds abroad for specific purposes, but no scheme currently exists for the transfer of the sale proceeds of crypto assets. When South African residents transfer funds abroad they are required to sign a declaration that the funds are being used for the purpose indicated to the Authorised Dealer (bank). Therefore, any other purpose stated on the relative declaration will have the effect of the South African resident making a false declaration which, of course, has legal implications. If you have any further queries, specifically in respect of exchange controls and crypto assets, you can submit a request to SARB-ADLA@resbank.co.za. Additionally, the Intergovernmental Fintech Working Group is in the process of developing a revised policy on crypto assets and crypto asset related activities. The IFWG recently published a draft position paper, which is under revision after a period of public comment. The final paper will set the policy position for South Africa on crypto assets which will lead to the development of a regulatory regime. For additional information, please reference:

While there is no existing regulation that is specific to crowdfunding, companies looking to engage in this type of service are required to comply with the Financial Advisory and Intermediary Services (FAIS) Act. A Category 1, Category 2, or Category 3 license would need to be obtained under the FAIS Act depending on the underlying financial instrument (e.g., equities, etc.) and the nature of crowdfunding services provided.

Additional resources that may be helpful include:

In addition to a FAIS license, if credit will be offered over the crowdfunding platform,
companies will need to register as a credit provider under Section 40, 41, and regulation 4 of the National Credit Amendment Act, 19 of 2014.

Additional resources that may be helpful include:

It should be noted that each crowdfunding case will be reviewed on a case-by-case basis.

Offering of credit is regulated whenever parties (a credit provider and a consumer) conclude an agreement in terms of which payment of an amount owed by the consumer to the credit provider is deferred, and any charge, fee or interest is payable to the credit provider in respect of the agreement or the amount deferred.

Therefore, the National Credit Act regulates transactions where:

  1. a credit provider advances money, or sells goods or services on credit, and
  2. defers the repayment of the advanced money or the costs of the goods or services; and
  3. charges interest, fee or any charge for the deferment or under that agreement.

Once a transaction meets the above requirements, it will be regulated by the National Credit Act, and a credit provider under such transactions must be registered with the National Credit Regulator (NCR), and furthermore comply with the National Credit Act, including conducting affordability assessments.

If a transaction does not meet the three requirements of a credit agreement outlined above then such a transaction will not be regarded as a credit agreement and will fall outside the provisions of the National Credit Act, with no obligation on the credit provider to register with the NCR or to conduct an affordability assessment.

Currently, in terms of the existing exchange control regulations, only individuals may purchase crypto assets abroad through the utilisation of their single discretionary allowance (SDA) of R1 million, and/or individual foreign capital allowance (FCA) of R10 million with a Tax Clearance Certificate, per calendar year. This is explained in greater detail in the Currency and Exchanges Manual for Authorised Dealers, which a local Authorised Dealer in foreign exchange (i.e. a commercial bank) will be able to assist individuals with. Business entities are currently not allowed to purchase crypto assets abroad or from foreign crypto asset trading platforms/exchanges.

Please refer to Recommendations 11, 15 and 16 of the draft IFWG Crypto Assets Position Paper (https://www.ifwg.co.za/wp-content/uploads/IFWG_CAR_WG-Position_Paper_on_Crypto_Assets.pdf), which articulates the IFWG’s proposed treatment going forward. Should these recommendations be implemented, the Financial Surveillance Department of the SARB will assume the regulatory and supervisory responsibility for the monitoring of the purchasing and selling of crypto assets in South Africa as well as illicit cross-border flows of value using crypto assets. In future, Crypto Asset Trading Platforms (CATPs), under licence from the Financial Surveillance Department of the SARB, will be able to conduct the offshore purchasing of crypto assets for selling to the local market. Business entities that are not licensed as a CATP by the Financial Surveillance Department of the SARB will not be authorised to purchase crypto assets from abroad. The movement of crypto assets abroad will only be allowed to occur through vetted and approved CATPs or crypto asset service providers (CASPs) with a (still to be determined) limit on the allowable values leaving South Africa.

The design and implementation of the CATP authorisation and reporting framework is therefore work in progress and still in the development phase. As a result, business entities cannot presently be authorised as CATPs until the framework has been completed and approved.

The legislative and regulatory framework in South Africa is activity-based. This means that if an entity is performing a specific activity which is regulated in terms of a specific legislative framework, the entity must be duly licensed, regulated and supervised in terms of the relevant legislative framework. The responsibility to determine the activity/activities in which an entity engages (or intends to engage in future), and to concomitantly assess whether their business model falls within the requirements of a specific legal framework, vests wholly with an entity. While the Regulatory Guidance Unit therefore cannot identify or determine the activities an entity is performing (or intends to perform in future), it can provide an opinion on specific questions regarding the policy landscape and regulatory requirements once an entity has identified the activity/activities in which it engages (or intends to engage in future).
Neither the IFWG nor the Regulatory Guidance Unit endorses any activities or confirms whether an entity’s existing or intended future operations falls within the legislative framework.

Neither the IFWG nor the Regulatory Guidance Unit endorses any activities or confirms an entity’s legitimacy, business model and/or product/service offering. Specifically with regard to crypto assets, please refer to the SARB’s 2014 Position Paper on Virtual Currencies (available here), which highlights that there is currently no regulatory protection for consumers engaging in crypto asset-related activities, and that consumers engaging in such activities are therefore doing so at their own risk

Crypto asset arbitrage trading FAQs

Under the current Exchange Control Regulations administered by the Financial Surveillance Department (FinSurv) of the South African Reserve Bank (SARB), individuals are allowed to utilise their Single Discretionary Allowance (SDA) of up to R1 million per annum, and/or individual foreign capital allowance (FCA) of up to R10 million with a Tax Compliance Status (TCS) PIN, to send funds offshore for investment purposes. Although the current Exchange Control Regulations do not explicitly allow the sending of funds abroad specifically for purchasing crypto assets, individuals are currently not expressly prohibited from doing so. On the other hand, the current Exchange Control Regulations explicitly stipulate the categories for which business may send funds abroad, and currently crypto assets are not recognised as such an asset. As a result, legal entities other than natural persons are not currently allowed to send funds abroad for the purpose of purchasing crypto assets.

Please refer to Recommendations 11, 15 and 16 of the draft IFWG Crypto Assets Position Paper (available here), which articulates the IFWG’s proposed treatment going forward. Should these recommendations be implemented, FinSurv will assume the regulatory and supervisory responsibility for the monitoring of the purchasing and selling of crypto assets in South Africa as well as illicit cross-border flows of value using crypto assets. In future, Crypto Asset Trading Platforms (CATPs), under approval from FinSurv, will be able to conduct the offshore purchasing of crypto assets for selling to the local market. Business entities that are not appointed as a CATP by FinSurv will not be authorised to purchase crypto assets from abroad. The movement of crypto assets abroad will only be allowed to occur through vetted and approved CATPs or crypto asset service providers (CASPs) with a (still to be determined) limit on the allowable values leaving South Africa.

The design and implementation of the CATP authorisation and reporting framework is therefore work in progress and still in the development phase. As a result, business entities cannot presently be authorised as CATPs until the framework has been completed and approved.

In terms of the current Exchange Control Regulations, neither individuals nor legal entities are currently allowed to purchase crypto assets in South Africa and send these assets abroad. An individual may, however, exchange Rand for foreign currency in South Africa under his/her R1 million SDA and/or R10 million FCA via a local Authorised Dealer in foreign exchange (i.e. a commercial bank) for the purpose of investing the funds offshore. Should the individual choose to purchase crypto assets abroad, he/she may then send the foreign currency abroad via the formal banking system from the local Authorised Dealer (i.e. a commercial bank) to the relevant individual’s account with a foreign-domiciled CASP, and then purchase crypto assets from this foreign CASP. The crypto assets acquired in this manner may then be introduced into South Africa. It should be noted that FinSurv does not currently approve applications received from individuals to expropriate more than R10 million per calendar year, and that any crypto assets introduced into South Africa are not regarded as a repatriation of an individual’s SDA or FCA.

It should further be noted that South African Revenue Service (SARS) will not approve requests for TCS certificates and/or TCS PINs in instances where there is current proof that the funds for which a TCS PIN is being requested have already been invested abroad. SARS does therefore not issue multiple TCS PINs for the same capital, and the re-using of TCS PINs for the same capital is therefore not allowed. This implies that should a TCS PIN be issued by SARS in amount of e.g., R100 000, only up to R100 000 may be transferred in terms of the relevant TCS PIN and an individual cannot use the TCS PIN again to transfer additional funds.

In terms of the process described above, there are four parties involved when an individual intends to send funds abroad, namely:

  • the individual intending to send funds abroad;
  • the Authorised Dealer (i.e. commercial bank);
  • the SARB’s Financial Surveillance Department (FinSurv); and
  • the South African Revenue Service (SARS).
These four parties’ respective roles in the process are illustrated sequentially as follows:
The individual submits a request his/her nominated Authorised Dealer (i.e. commercial bank) to use Rand to purchase foreign currency.

The Authorised Dealer performs the necessary verifications on the customer and execute the instruction from the individual to purchase foreign currency (using Rand) for the specified amount.

The individual instructs the Authorised Dealer to send the foreign currency to his/her nominated counterparty abroad.
The Authorised Dealer will send the funds abroad as requested and report it to FinSurv via the FinSurv Reporting System. The onus is on the individual to ensure he/she does not exceed his/her SDA as per the declaration signed on the Integrated form. If an individual has reached his/her R1 million annual SDA, the following process is followed:

The individual or his/her duly authorised representative will request a Tax Compliance Status (TCS) PIN from SARS, confirming that the requesting individual’s tax affairs are in order and that he/she has a valid TCS certificate. Once the TCS PIN is presented by the taxpayer to the Authorised Dealer, the Authorised Dealer will verify the taxpayer’s tax compliance status via SARS eFiling and retain proof of the taxpayer’s tax compliance status at the time of the transaction. If the taxpayer is found to be non-compliant in terms of his/her tax compliance status, the Authorised Dealer cannot proceed and the taxpayer must resolve his/her non-compliance status with SARS first. Accordingly, if the individual does not have a TCS PIN, funds in excess of a client’s SDA will not be allowed to be transferred abroad.

Should the individual have a valid TCS certificate, the Authorised Dealer will request a TCS PIN from SARS.
The application process commences with SARS where the taxpayer would apply for a TCS PIN from SARS. By issuing the TCS PIN, SARS is essentially indicating that it is comfortable that the taxpayer is tax compliant and that SARS has no objection to the funds being transferred, meaning that the approval of the funds to be transferred offshore thus resides with the Authorised Dealer for applications up to R10 million, and with FinSurv for applications over R10 million. SARS will consider the client’s request and, if approved, issue the TCS PIN to the client, which the Authorised Dealer will use to verify the tax compliance status of the client, effect the instruction and send the funds abroad.
The repatriation of value to South Africa specifically through crypto assets is currently not acknowledged as a repatriation of an individual’s SDA or FCA as such transactions are currently not reportable on the FinSurv Reporting System. Crypto assets are also not regarded as legal tender in South Africa. The funds-in-funds-out principle does therefore not apply to crypto assets, with the implication being that if an individual repatriates crypto assets to South Africa, converts same to Rand, and wishes to retransfer the proceeds abroad, the individual will be required to obtain a new TCS PIN from SARS (for transactions in terms of the FCA).

SARS will only issue a TCS PIN for an individual taxpayer to access his/her FCA when SARS is satisfied that the taxpayer is tax compliant. The issued TCS PIN is valid for 12 months from the date of issue (and is dependent on the taxpayer’s future compliance status), and the TCS PIN is issued for the specific amount requested by the taxpayer. The taxpayer will present the TCS PIN to the Authorised Dealer (although often the Authorised Dealer or tax practitioner will request this on the individual’s behalf), who will then approve the transfer of that specific amount stated on the TCS PIN or transfers up to that specific amount. Should the taxpayer want to externalise additional funds from South Africa, the taxpayer or his/her duly authorised representative is then required to apply to SARS again to be issued with a new TCS PIN that indicates the new amount.

The generally accepted practice by which SARS decides on issuing a TCS PIN for FCA-related matters is by considering the individual’s liquid asset base, where SARS will validate the source and availability of funds. There is comprehensive SARS guidance on the source of funds (available here). In addition, there are no specified limits or points at which applications for obtaining new TCS PINs from SARS are set. However, please note that submitting a new application before the value stipulated on a TCS PIN is exhausted (or indeed close to being exhausted) will increase SARS’s overall turnaround times, especially in a space where SARS is already experiencing severe processing capacity constraints.

In short, no. Section B.2(B)(i)(d) of the Currency and Exchanges Manual for Authorised Dealers (Authorised Dealer Manual), states the following:

“In terms of the SARS Tax Compliance Status (TCS) system, a TCS PIN letter will be issued to the taxpayer that will contain the tax number and TCS PIN. Authorised Dealers must use the TCS PIN to verify the taxpayer’s tax compliance status via SARS eFiling prior to effecting any transfers. Authorised Dealers must ensure that the amount to be transferred does not exceed the amount approved by SARS. Authorised Dealers should note that the TCS PIN can expire and should the Authorised Dealer find that the TCS PIN has indeed expired, then the Authorised Dealer must insist on a new TCS PIN to verify the taxpayer’s tax compliance status.”

Accordingly, note that the wording “Authorised Dealers must ensure that the amount to be transferred does not exceed the amount approved by SARS” implies that should a TCS PIN be issued by SARS in the amount of e.g. R500 000, only an amount of up to R500 000 may be transferred in terms of the relevant TCS PIN. An individual will therefore only be able to transfer up to R500 000 with the TCS PIN and cannot use the TCS PIN again to transfer additional funds using the same TCS PIN. However, should an individual only transfer, e.g. R100 000 of the R500 000 for which he/she received approval, he/she may use the remaining R400 000 (i.e. the balance) by using the same TCS PIN within 12 months from the date of issuance of the TCS PIN (i.e. the TCS PIN is valid for 12 months from the date of issue). Furthermore, section B.2(B)(ii)(a) of the Authorised Dealer Manual states the following:

“The Rand equivalent of income earned abroad and own foreign capital introduced (with the exceptions of that stated below) into South Africa on or after 1997-07-01 by private individuals resident in South Africa, may be retransferred abroad (excluding any growth on the funds introduced), provided that the Authorised Dealer concerned is satisfied that the income and/or capital had previously been converted to Rand, by viewing documentary evidence confirming the amounts involved.”

Funds transferred abroad under an individual’s FCA, accompanied by a TCS PIN, and repatriated to South Africa in foreign currency, may therefore be retransferred abroad without an additional TCS PIN. This creates a ‘funds-in-funds-out’ principle in terms of South Africa’s current exchange control policy. As mentioned above, the repatriation of value to South Africa specifically through crypto assets is currently not acknowledged as a repatriation of an individual’s FCA as such transactions are currently not reportable on the FinSurv Reporting System. Crypto assets are also not regarded as legal tender in South Africa. The funds-in-funds-out principle does therefore not apply to crypto assets, with the implication being that if an individual repatriates crypto assets to South Africa, convert same to Rand, and wish to retransfer the proceeds abroad, the individual will be required to obtain a new TCS PIN from SARS.

Additional FAQs on the SARS Tax Compliance Status (TCS) PIN

The TCS PIN is simply a means to confirm a taxpayer’s tax compliance status and the result verification will indicate the amount the taxpayer wants to transfer offshore by SARS.
Once issued, the TCS PIN will indicate the amount approved by SARS that may be transferred abroad, subject to the taxpayer’s TCS status being equal to “Compliant”. Once the Authorised Dealer or AD (i.e. a South African commercial bank) has approved the request and the amount is transferred, the taxpayer is required to apply again to SARS to be issued with a TCS PIN for the new amount the taxpayer is applying for.

Frequently asked questions about crypto assets

Crypto assets cannot be narrowly or easily defined as they may perform different functions depending on their design and use. Although Bitcoin specifically was designed to function both as a payment instrument and a payment system, subsequent crypto assets vary greatly in terms of their design and proposed use cases: some intend to serve as a payment instrument (whether domestic or cross-border), a payment system, an international remittance instrument, an investment, a means to pool investments (similar to a collective investment scheme), a security, a means of capital raising (e.g. through an initial coin offering, or ICO), or a combination of these functions. When combining tax, exchange control, money laundering, terrorist financing, intermediary service, financial advice and consumer protection issues with the above-mentioned functions that may potentially be performed by crypto assets, it quickly becomes evident that crypto assets simply cannot be narrowly defined.
Bitcoin was the first crypto asset. It was announced through the Bitcoin white paper at the end of 2008, and the first Bitcoin transaction was recorded in January 2009. Following the ‘mining’ (i.e. validation) of the Bitcoin genesis block in 2009, the crypto asset ecosystem has grown to more than 10,000 ‘unique’ crypto assets as at the time of writing, each with a relatively unique value proposition and design. The number of crypto assets in circulation continues to grow by around 10 crypto assets per day.

In short, no. In terms of the South African Reserve Bank (SARB) Act 90 of 1989 (available here), money is defined as legal tender, which in turn is defined as:

  • “A tender, including a tender by the [South African Reserve] Bank itself, of a note of the Bank or of an outstanding note of another bank for which the Bank has assumed liability in terms of section 15 (3) (c) of the Currency and Banking Act or in terms of any agreement entered into with another bank before or after the commencement of this Act, shall be a legal tender of payment of an amount equal to the amount specified on the note.”
  • “A tender, including a tender by the Bank itself, of an undefaced and unmutilated coin which is lawfully in circulation in the Republic and of current mass, shall be a legal tender of payment of money”.

In the South African context, legal tender (i.e. money) is limited to banknotes and coin issued by the SARB. From a legal perspective, crypto assets are therefore not recognised or viewed as money. Questions around whether crypto assets constitute e-money in South Africa are addressed later.

No. The decision to regulate crypto assets does not signal or suggest endorsement of crypto assets by the IFWG members. The decision to regulate crypto assets aims to promote responsible innovation. The IFWG reiterates that crypto assets remain highly volatile and inherently risky given their decentralised and disintermediated value proposition. However, given the current conjuncture (i.e. more than 12 years after the mining of the Bitcoin Genesis block and with almost 10,000 crypto assets in existence as at May 2021), there is growing consensus that crypto assets and related activities are unlikely to go away any time soon. Inaction by the South African financial regulators will therefore potentially accelerate the creation of unregulated parallel systems, and will essentially continue to prevent authorities from having ‘line of sight’ of crypto-related activities as the market evolves. It is emphasised that by gradually bringing crypto assets into the South African regulatory purview, risks identified will be addressed.
The South African policy position on crypto assets is neither explicitly ‘hostile’ nor explicitly ‘friendly’: through the IFWG CAR WG position paper, the South African financial sector regulators aim to remain neutral with the objective of enabling responsible innovation in the crypto asset ecosystem, while ensuring a level playing field between both incumbent and new role players. In addition, in line with the revised standards of the FATF issued in October 2019, all jurisdictions are required to regulate crypto assets and crypto asset service providers (referred to as ‘virtual assets’ and ‘virtual asset service providers’ by the FATF) for anti-money laundering and combating the financing of terrorism.
In the domestic context, the main concerns around the use of crypto assets are around their well-documented use for illicit activities (including but not limited to tax evasion, money laundering and terrorism financing), the potential longer-term impact on the effectiveness of monetary policy tools, the potential longer-term impact on financial stability (through developments including but not limited to the creation of parallel payment systems), the flight of capital abroad through the evasion of South African exchange controls. There are then also consumer risks and consumer protection issues. Customers may invest in risky products or services that they do not fully understand and which are unsuitable to their needs, or may fall prey to fraudulent players running scams purporting to relate to crypto asset products.
Given that a crypto asset may be utilised to serve differing functions and purposes because of its multi-faceted nature, will have an impact multiple pertinent existing definitions and pieces of legislation and regulation crypto assets may perform different functions as described above (based on their design and use), different crypto assets may be subject to different definitions and, resultantly, different pieces of legislation and regulation. The fact that crypto assets also combine different functions (e.g. by being a payment instrument and payment system that functions across borders) means that the activities they perform cut across different South African financial sector laws, which thus requires the involvement of various financial sector regulators. A holistic and coordinated approach to regulating crypto assets in South Africa is therefore crucial.
The intention is not to regulate the actual crypto assets and associated products per se, but rather the entities that provide services in relation to such products. The South African regulators therefore intend to regulate crypto assets by regulating the crypto asset service providers, or CASPs.
Without delving into the highly philosophical discussion around what is intrinsic value and what has intrinsic value, suffice it to say that crypto assets fundamentally derive their value from pure market forces, that is, the price of crypto assets is determined by supply relative to demand, and vice versa. In other words, crypto assets’ market value is determined by the price a potential buyer is willing to pay for a crypto asset (or ‘piece’ thereof), relative to the price the seller is willing to accept for the crypto asset (or piece thereof). The value underlying crypto assets is – as well recorded – not based on any tangible reference asset, but rather (potentially imperfectly) a reflection of the network supporting a particular crypto asset. The value is therefore in the scale of the network using and supporting a particular crypto asset through support activities (e.g. mining, running a node etc.). These factors, coupled with the global lack of regulatory and legal certainty around crypto assets, as well as the significant role investor sentiment plays in crypto asset trading behaviour, combine to make crypto assets extremely difficult to value.
As explained above, crypto assets do not have tried and tested valuation methods like traditional, physical assets have. Prices are therefore essentially subject to pure economic forces in the form of supply and demand or, phrased differently, the price is determined relative to what a buyer is willing to pay and the seller is willing to accept. Given the strong retail interest in crypto assets, investor sentiment plays a significant role in determining the price of crypto assets, and accordingly contributes to the volatility.

No. In terms of the National Payment Systems Act 78 of 1998 (available here), only registered South African banks are allowed to issue e-money, thus wholly excluding crypto assets.

Yes. Legal tender obliges and/or assumes acceptance when offered as means of payment. However, if something is not legal tender – such as crypto assets – it does not mean merchants and individuals are expressly prohibited from accepting it when offered as a means of payment. Merchants and individuals may therefore choose to accept ‘payment’ offered in crypto assets of their own free will, with the understanding and acceptance of the risk that they will not have regulatory recourse from a payment perspective should something go wrong. In this instance, crypto assets function as a type of barter instrument, with the price being determined in accordance with the ‘willing-buyer-willing-seller’ principle. Although crypto assets are not money, they can nevertheless perform certain money-like functions.

No. The Banks Act 94 of 1990 (available here) defines a deposit as necessarily being ‘money’, which refers to legal tender as defined in the SARB Act, and which then excludes crypto assets as explained above.

No. In terms of the Exchange Control Regulations of 1961 (available here), foreign currency is defined as any currency that is not legal tender in South Africa, with the implication that such foreign currency is legal tender in another country. Given that crypto assets are consistently not regarded as legal tender globally, crypto assets are therefore excluded from the definition of foreign currency for the purposes of the Exchange Control Regulations of 1961.

No. Exchange Control Regulation 10(1)(c) prohibits transactions where capital or the right to capital is, without permission from National Treasury, directly or indirectly exported from South Africa. This includes transactions where an individual purchases crypto assets in South Africa and uses them to externalise ‘any right to capital’. Contravening these regulations is a criminal offence. For any further exchange control related queries in relation to crypto assets, please refer to the Financial Surveillance Department’s webpage on the South African Reserve Bank’s website at www.resbank.co.za by following the path: What we do > Financial Surveillance > Frequently asked questions and clicking on ‘Crypto assets’.

Yes. The proceeds of such activity are, however, subject to relevant tax and exchange control regulations and legislation.
There are both tax and exchange control implications of staking crypto assets. These implications are exacerbated if an individual’s crypto assets are staked via an offshore third party.
No. As explained above, crypto assets remain highly volatile and investing in crypto assets remains inherently risky. As with any investment, the ultimate responsibility to ascertain whether the risk associated with an investment lies with the consumer. As always, returns are not guaranteed, and past performance is not an indicator of future performance.