The cryptocurrency debate: Crypto-currencies, such as bitcoin, have become increasingly popular in the past few years. Throughout the world, including South Africa, bitcoin has infiltrated many industries. However, there are traditional businesses and banks that do not recognize them. The South African Reserve Bank (SARB) has said that they do not recognize the term ‘cryptocurrency’. Instead they are referring to it as ‘cyber tokens’. Here’s why:
[Source: SA Central Bank Comes Up With Another Nickname for Cryptos – “Cyber Tokens”]
Cryptocurrency: A Rose by any other name:
According to SARB, cryptocurrency does not technically qualify as traditional money as we know it and thus cannot be viewed as conventional currency. “We don’t use the term ‘cryptocurrency’ because it doesn’t meet the requirements of money in the economic sense of the stable means of exchange, a unit of measure and a stable unit of value,” says the central bank’s Deputy Governor, Francois Groepe. “We prefer to use the word ‘cyber-token’.” Furthermore, the unregulated nature and exponential growth of crypto-currencies are causes of concern for many banks and businesses. SARB has even had to set up a special unit tasked to review its position on “private cryptocurrencies.”, with the aim of preparing a policy framework that would lay the foundation for the future regulatory regime to govern the fintech sector. Legal experts suggest a form of self-regulation.
SARB is not the only institution that has renamed cryptocurrency. ‘Virtual currency’ is the most popular term that is used by most officials, organisations and unions such as those in the US, the EU, the IMF, Mexico, Malta, and the Philippines. In Russia’s draft laws on crypto regulation, they refer to it as “digital money,” “digital financial assets,” “digital rights,” “other property,” “electronic property,” and “money surrogates”.
Arguments against SARB’s response
SARB and other institutions that do not recognize crypto currencies, do so as a form of deligitimacy. This way, these currencies are not given much power in the official public realm. However, SARB has announced that those who earn cryptocurrency gains must declare it as part of their taxable income. In an announcement earlier in the year, SARB declared that, “The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.” SARB argues that these cryptocurrencies are “assets of an intangible nature” and thus taxable. However, some may argue that by including it in taxable income, SARB is in fact acknowledging the existence and value of cryptocurrencies.
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