Cryptocurrency, within its definition, is defined as a digital asset. Cryptocurrency is viewed with high praise as the newest and most promising asset to be newly introduced in South Africa. Bitcoin is a relatively new and purely digital currency; its main purpose is to provide every individual with a fairer financial system in which everyone has equal standing. Bitcoin allows you to buy and sell Bitcoin in South Africa through a reputable Bitcoin exchange. It is designed simply to the extent that exchanges can be done via your Smartphone or computer using the mobile app.
Cryptocurrencies are unregulated because Bitcoin and Cryptocurrencies have no legal status or regulatory framework in South Africa. One is free to trade Cryptocurrencies at their own risk in South Africa. This poses various risks for those that would choose to transact with it, such as:
- Lack of guarantee of security;
- Convertibility or
- Value
In 2018, government and financial watchdogs enacted new laws to regulate the industry. Under the South Africa Reserve Bank (SARB) – South Africa’s financial landscape, including Cryptocurrencies, all fall under the jurisdiction thereof. According to the South African Reserve Bank Act, of 1989, the SARB is the only bank that has the right to issue coins and notes, this is because SARB governs the management of currency.
Bitcoin, however, does not fall within the definition of legal tender. As a result, payments made via Bitcoin in South Africa may not discharge a debtor of a monetary obligation and purchasers may run the risk that their Bitcoin payments will not be recognised by South African law. In addition, merchants are legally entitled to refuse to accept Bitcoin as legal payment.
Bitcoin has a smart feature as it allows one to anonymously use the app, which leaves room for money laundering. It also poses others threats because there is an inability to control the cryptocurrency, therefore it cannot be trusted. The fact that Bitcoin is decentralised and operates without the authority or the control of a bank or state, amounts to various difficulties regarding taxation; circumvention of exchange control regulations; loss of fees for banks; and weakening the growth of local currencies.
There are however many advantages of Bitcoin, namely, it is described as a far-reaching manner to transfer money in a much ‘faster, simpler and more efficient process. This is evident as Bitcoin operates on a ‘peer to peer’ platform which simply means that there is no need for a bank to act as an instrument when transferring payment, it is directly sent to the bearer.
Should you need any legal assistance regarding a dispute arising due to Bitcoin, do not hesitate to contact BBP Law Inc
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