The South African cryptocurrency industry is calling on the National Treasury to officially classify Bitcoin as an onshore asset, arguing that such a move would enhance regulatory clarity, attract institutional investors, and boost the country’s economic growth.
According to TechCentral at the forefront of this push is Luno, a Digital Currency Group-owned exchange, which believes that treating Bitcoin as a standard investment asset on par with stocks, government bonds, and fiat currencies would align South Africa with global financial trends.
“Internationally, cryptocurrencies are now just another recognized asset class to invest in along with stocks, government bonds, and fiat currencies,” said Paul Harker, Luno’s global head of legal and corporate strategy.
A Shift Toward Economic Growth
Industry leaders argue that in South Africa’s constrained fiscal environment, forward-looking policies are crucial to unlocking new economic opportunities. By classifying Bitcoin as an onshore asset, policymakers could:
- Provide regulatory clarity that fosters mainstream adoption.
- Attract institutional investment into the crypto sector.
- Expand the tax base without additional costs to the government.
Luno warns that without such reforms, South Africa risks falling behind nations that have embraced digital assets as part of their financial ecosystems.
“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 company stated.
Regulatory Uncertainty Holding Back Crypto Growth
South Africa’s Financial Sector Conduct Authority (FSCA) classified crypto assets as financial products in October 2022, marking a major step toward oversight and consumer protection. However, Bitcoin remains in regulatory limbo, classified as neither an onshore nor offshore asset.
This ambiguity complicates tax reporting and cross-border crypto transactions with the South African Reserve Bank (SARB), creating confusion for both investors and exchanges.
By officially recognizing Bitcoin as an onshore asset, crypto profits could be reinvested locally, contributing to economic growth and tax revenue expansion, Luno argues.
South African Reserve Bank’s Position on Bitcoin
Despite ongoing discussions, SARB has yet to make a definitive ruling on Bitcoin’s classification for capital flow management purposes.
“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,” SARB told TechCentral.
However, SARB Governor Lesetja Kganyago has repeatedly expressed skepticism about cryptocurrencies, rejecting proposals to include Bitcoin in South Africa’s strategic national reserves.
Calls for Accelerated Action
With global financial institutions increasingly incorporating digital assets into their portfolios, pressure is mounting on South African regulators to provide a clear framework for the country’s crypto sector.
Luno has urged policymakers to act swiftly, emphasizing that delays in regulatory clarity could hinder South Africa’s ability to capitalize on digital assets.
“Luno acknowledges the forward strides already made in South Africa’s regulation of digital assets,” the company stated. “But ordinary South Africans and the fiscus have yet to experience the true benefit of the digital asset revolution.”
What’s Next?
As discussions around Bitcoin’s regulatory status continue, the future of South Africa’s crypto industry remains uncertain. However, with growing institutional interest and increasing global adoption, the case for Bitcoin as an onshore asset is gaining momentum.
If regulators take proactive steps, South Africa could position itself as a leader in digital asset integration, strengthening its financial sector and driving innovation in the rapidly evolving crypto economy.
