Cryptocurrency: Overseas Exchanges Are Illegal In South Africa – Did You Know You Could Be Penalized?

Cryptocurrency Overseas Exchanges Are Illegal In South Africa – Did You Know You Could Be Penalized?
(Photo : Getty Image: VCG)

The South African Reserve Bank, together with other regulators, has released a warning that transferring cryptocurrency bought from the local exchange into another country is now considered a criminal offense.

Certain regulators have already issued the warning through the IFWG or the Intergovernmental Fintech Working Group.

The group recently released a Frequently Asked Question (FAQ) document to fulfill its task as a part of the position paper on various crypto assets.

The Criminal Offense

According to MyBroadBand‘s report, the IFWG comprises the Financial Intelligence Center, Competition Commission, National Credit Regulator, Financial Sector Conduct Authority, South African Revenue Service, National Treasury, and South African Reserve Bank.

In the FAQ, IFWG stated that they prohibit transactions involving a capital or right to capital without the National Treasury’s consent, indirectly or directly exported outside South Africa.

It also covered transactions involving individual purchases of cryptocurrency assets within the South Africa and externalizing any right to capital.

The FAQ also entailed a warning, stating that breaking the approved regulation regarding the right to capital is already considered a criminal offense.

Read Also: Britain Pushes Through Various Crypto Curbs – Gives Warning To Unregistered Crypto Companies?

Punishment for Transferring Bitcoin Overseas

South Africa’s exchange control regulations bear a minimum penalty of R250,000 fine (more than $16,600), and the violator may or may not face up to five years of imprisonment.  

Depending on the severity of the crime, the fine’s value may increase up to the violator’s transaction value under certain circumstances. 

However, the FAQ regulations mainly link this occurrence with foreign currency, security, bank-note, gold, bill, postal order, debt, note, goods, or payment.

How Will It Affect Crypto Trading in South Africa?

Sadly, none of South Africa’s three major cryptocurrency asset exchanges wanted to address the challenges they will face now that there is a punishment for overseas transfer.

Both Altcoin Trader and Luno provide services that allow clients to earn interest on various cryptocurrency assets that they hold, depending on their respective platforms.

According to MyBroadBand, these products typically rely on patterns as a way to function. It is not yet clear how the decrees from IFWG and SARB will affect these services as of June.

The Crypto Market in South Africa

The Altcoin Trader CEO Richard de Sousa confirmed that they are currently looking at the papers that IFWG recently published. His company is taking many things into further consideration.

De Sousa added that Altcoin Trader is still undecided about its next big move and that it still cannot give appropriate feedback at this point. 

On the other hand, Luno’s GM for Africa, Marius Reitz, stated that it is still unclear how the law will be regulated and implemented despite the FAQ’s in-depth guide. He added that Luno is exceptionally supportive of clear and market-conductive regulations for South Africa’s crypto market and industry.

Related Article: Miami Mayor Encourages Chinese Crypto Miners with Robust Incentives and Cheaper Nuclear Energy

This article is owned by Tech Times

Written by Fran Sanders

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