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We are going to explore 30 frequently asked questions about crypto in South Africa that will help combat any misinformation and clear up any confusion surrounding the questions you may have!
Let’s explore:
The 17 most common questions about Crypto in South Africa
How legal is crypto in South Africa?
Completely legal
The South African Reserve Bank has recognized digital currencies as a legitimate method of payment. However, the country’s regulators have issued warnings about the risks associated with investing in digital assets, including the lack of regulation and the potential for fraud.
You can check out our detailed article on the Legality and Regulation of cryptocurrency in SA for a more comprehensive dive into the topic!
Does South-Africa have it’s own Cryptocurrency?
No, South Africa does not have its own cryptocurrency.
How many South-African’s own Cryptocurrency?
Estimated at 10 Million, which is around 16% of the population.
83% of all crypto in South Africa is held by people younger than the age of 45.
What is the best place to buy crypto in South-Africa?
Personally, I have had a great experience using Bybit for my purchasing and trading, and Binance for withdrawals.
They are simply better priced, most user friendly and have access to more products and markets than South-African alternatives like Luno or Alt Coin who trade at higher than market rights, forcing us to absorb the expense and cover their “Commissions”
You can read more about the details behind this in our article on picking the best exchange as a South-African trader.
A worthy mention is also VALR, as a South-African company with good service and rates they are worth checking out!
What are the fees associated with trading crypto in South Africa?
Because there are so many moving parts, it can become tricky to understand.
We have created a chronological fee break down for a $100 US dollar derivative trade on our favorite platform Bybit:
Chronological fee breakdown for a derivative trade on Bybit
| Fees | Amount |
|---|---|
| Deposit fee | Free |
| Trading fee | 0.075% |
| Overnight fee (x15 leverage) | -0.0426% |
| Funding fee (long) | 0.034% |
| Funding fee (short) | -0.034% |
| Withdrawal fee | 0.0005 BTC |
| Network fee (BTC withdrawal) | 0.0005 BTC |
| Network fee (ETH withdrawal) | 0.01 ETH |
| Total fees per trade (long) | 0.1096% |
| Total fees per trade (short) | 0.0186% |
| Total fees for 10 trades (long) | 1.096% |
| Total fees for 10 trades (short) | 0.186% |
| Estimated taxes (South Africa) | 20-45% |
| Estimated profit after taxes (long) | 11.9-36.4% |
| Estimated profit after taxes (short) | 11.5-36% |
It’s important to note that while this is a pretty comprehensive timeline of a derivative trade, that there are still other hidden fees involved within the crypto industry, especially when you start dealing with revenue generating protocols like De-Fi, Staking, Mining & NFT’s.
For more information on the topic, check out our Introductory article on crypto in South Africa, where we cover it in more depth.
What is the most popular cryptocurrency in South – Africa?
By value traded – Bitcoin
This is the same across the entire African continent, however it may not be a true representation of the most popular currency.
If we consider crypto companies that have invested into the continent and have started implementing utilitarian products and services, it would then have to be Cardano blockchain.
Cardano team has launched several blockchain-based projects in South Africa and other African countries, such as Ethiopia and Nigeria. They are also working on practical applications of blockchain such as digital identity and other useful projects, and are likely to get more involved in future projects pertaining to our digital identity.
What is the first South African blockchain?
The first African blockchain was developed in South Africa and is called the “Khokha” blockchain.
It was created by the South African Reserve Bank in collaboration with a group of local banks in order to explore the potential use of blockchain technology in the country’s financial system.
The Khokha blockchain was designed to facilitate real-time gross settlement (RTGS) transactions between participating banks, with the aim of reducing settlement times and costs.
The successful completion of a pilot project in 2018 demonstrated the potential of the Khokha blockchain to transform the South African financial system, though little change has occurred yet as the blockchain has almost no public adoption yet.
What is the best crypto project in South-Africa?
After looking at all the options available, we have settled on :
VALR – The South – African exchange
VALR is determined to compete with international exchanges and offer competitive prices to their customers.
Registered in South Africa in 2018, they are committed to expanding the market locally and throughout Africa and by offering a wide range of trading pairs and a user-friendly platform, VALR is poised to be the go-to crypto exchange for the rapidly expanding African Crypto Markets.
The competitive pricing, abundant coin pairings and good service is a breath of fresh air when compared to it’s competitors in the market
Is Crypto big in South Africa?
Bigger than anywhere else in Africa, but barely.
While Nigeria might have more users, it also has a much larger population, which puts it in a close second place statistically in the adoption race with 14-15% against South-Africa 15-16%.
Is Cryptocurrency a safe investment in South-Africa?
Yes. it is
It is not risk free.
Crypto is a highly volatile and high risk asset by nature, however it is no more dangerous to invest in it in South Africa, than in a country like the US or UK.
This is not to say that every crypto asset out there is going x100 your initial investment, there are some projects that will, but for every success story there are thousands of coins and projects out there that are inherently useless, and will eventually become worthless.
This is where the responsibility of doing your own research comes in.
Learn how to identify a good technologies to invest into
Additionally, when you look at the instability of the South-African rand, and the future of our economy with the ever increasing threat of grid collapse as the country is crippled by state capture and corruption, diversifying a small percentage of your savings into a high risk asset class is actually keeping with financial best practices.
And while large parts of it are still unregulated in the grey area, South-Africa does have some regulation in place and there are governing bodies that have taken large steps forward in bringing regulation to the forefront.
Who regulates Cryptocurrency in South-Africa?
In South Africa, the regulation of cryptocurrency is mainly done by the Intergovernmental FinTech Working Group (IFWG), which is made up of several regulatory bodies, including the South African Reserve Bank (SARB), the Financial Sector Conduct Authority (FSCA), and the National Treasury.
Additionally, exchanges and other cryptocurrency service providers in South Africa are required to register with the Financial Intelligence Centre and comply with its anti-money laundering and counter-terrorism financing regulations
The IFWG aims to develop a regulatory framework for the cryptocurrency industry in South Africa to ensure that it operates safely and within the law.
You can read more about the legal and regulatory framework in South-Africa in our article on the topic.
What are the tax implications of trading crypto in South Africa?
Crypto taxes are managed and collected by the The South African Revenue Service (SARS)
They are even nice enough to give you a choice on what type of tax you get to pay, depending on if you classify as a investor, where you will pay a sub category of Income Tax – Capital Gains Tax or a trader who is subject to the usual Income Tax.
If you would like to learn more we have a comprehensive article that takes a deep dive into crypto taxes in South – Africa.
Can I use my South African bank account to deposit and withdraw from a crypto exchange?
Absolutely!
All the exchanges we have listed in this article will allow you to purchase crypto directly from your bank account.
In the past withdrawing was notoriously difficult and pricy, however since Binance and VALR have allowed withdrawals at fair market rates, it has become a lot easier to get your money back into your South-African account.
Is it safe to trade crypto on mobile devices in South Africa?
Your crypto is as safe as the best practices you follow, even on a mobile device.
Any decent exchange, like Bybit, will have Biometric and 2-Factor Authentication available. Protect your passwords and keys, don’t fall for fishing scams or hang out on too many public networks and you will be fine!
Is it possible to make a living as a full-time crypto trader in South Africa?
Absolutely!
In fact, with the lower cost of living in South Africa and our weaker currency, our profits mean more and go even further than in more developed nations.
Just always remember that crypto currency is inherently highly volatile which makes it substantially riskier than traditional investments.
Be sure to check out our beginners guide to make sure you take all the steps to manage your risk and exposure correctly!
What are the 10 biggest risks associated with crypto trading in South Africa?
| Risk | Description |
|---|---|
| Volatility | Cryptocurrencies in South Africa are highly volatile and can experience significant fluctuations in their prices in a short period of time. This can lead to huge losses for traders. |
| Lack of regulation | Cryptocurrency trading is largely unregulated in South Africa, which means that traders are exposed to risks such as fraud, hacking, and scams. |
| Lack of knowledge | Many people in South Africa lack sufficient knowledge about cryptocurrencies, which can lead to poor investment decisions. |
| Cybersecurity risks | Cryptocurrencies are stored in digital wallets, which can be vulnerable to cyber attacks, resulting in the loss of funds. |
| Lack of liquidity | The crypto market in South Africa is still relatively small, which means that there may be limited liquidity, making it difficult to buy or sell cryptocurrencies at desirable prices. |
| Exchange risks | Cryptocurrency exchanges can be hacked or shut down, which can lead to the loss of funds. |
| Market manipulation | Cryptocurrency markets can be manipulated by traders or whales, who can artificially influence the price of a cryptocurrency. |
| Scams | There are many scams associated with cryptocurrencies in South Africa, including Ponzi schemes and fake ICOs. |
| Political instability | South Africa has a history of political instability, which can affect the value of cryptocurrencies and the ability to trade them. |
| Power outages | South Africa is known for its unstable electricity supply, which can disrupt trading activities and result in financial losses for traders. |
What should I know about trading cryptocurrency in the Republic of South Africa?
In conclusion, we can determine that cryptocurrency in South-Africa, while having some challenges, overall has a bright future!
It is true that there are risks, however by investing wisely and trading safely, these can be managed, and the reward for becoming a successful investor pays off over many years!
- Always do your own research
- Never give control of your passwords or assets to anybody
- Store your long term assets in hard wallets, offline.
- Trade with the right exchange
- Keep record of your profits and losses
- Get a Tax consultant the moment you need to declare profits
- Follow your trading plan
- Invest into practical and utilitarian technologies
And you’ll be smiling!
Now check out the other articles in articles in this 5-part series on Crypto in South-Africa:
- Introduction to cryptocurrency trading in South Africa
- Legal and Regulatory Framework for Cryptocurrency Trading in South Africa
- Tax Implications of Cryptocurrency Trading in South Africa
- Future Developments and Trends in the Cryptocurrency Market in South Africa
- Picking the right exchange for trading cryptocurrency in South-Africa
Then head over to our trading resources to make sure you have the knowledge and capability to match your shiny new trading platform!
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