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Cryptocurrency exchange, Luno, says it wants to push Bitcoin’s position in South Africa by having the Treasury declare it an “onshore asset”, encouraging more people to invest in the crypto market.
According to Luno, the move will “advance the status of Bitcoin in South Africa’s financial regulatory landscape and allow institutional investors to apportion a larger share of their funds to the asset class”.
The Financial Sector Conduct Authority already declared crypto assets as financial products in October 2022, with the aim to get crypto in line with South Africa’s regulatory framework. The move allowed for better oversight, improved consumer protection, and clarity on how crypto is taxed.
Crypto is here to stay, so Luno reckons it should be an investable local asset like stocks and bonds.
Paul Harker, global head of legal and corporate strategy at Luno, in a statement this week, said, “Internationally, cryptocurrencies are now just another recognised asset class to invest in along with stocks, government bonds and fiat currencies.”
“In the current constrained fiscal reality, our government has little room to manoeuvre. Pro-growth and forward-looking decisions are essential.”
South African regulators have been cautious about introducing cryptocurrencies to the country’s financial system. Urging the treasury to recognise the potential of crypto, Luno says South Africa could find itself falling behind other markets in embracing crypto as a recognised asset.
As per TechCentral, Luno urged finance minister Enoch Godongwana to help change this classification, claiming it would, at “no cost to the fiscus”, see the returns generated by these assets “reinvested in South Africa, which in turn will increase tax revenue”.
Digital currencies are classified neither as onshore nor offshore assets, according to South African regulations. Luno said this “policy uncertainty” complicates the reporting of cross-border crypto transactions to the Reserve Bank.
Onshore assets typically refer to investments or assets that are held within the country’s borders. Recognising new assets, like Bitcoin, as “onshore” can have a positive effect on the local economy, reduce our reliance on foreign markets, and provide a certain measure of protection against geopolitical risks – and there are plenty of those at the moment.
The South African Reserve Bank is still not quite ready to recognise crypto as “real money”, and Luno hopes to speed things up.
“Ordinary South Africans and the fiscus have yet to experience the true benefit of the digital asset revolution that has boosted the economies of many other countries.”
The Reserve Bank told TechCentral on Friday that the Intergovernmental Fintech Working Group are on it.
“The classification of crypto assets as domestic or foreign for capital flow management purposes will form part of a framework to be decided on in due course.”
“In due course” might not be reassuring, but our banking systems have always been on the ball, so we remain hopeful.
[Source: Techcentral]
