South Africa Tightens Tax Oversight on Crypto Investors

South Africa intensifies crypto tax oversight; Ripple introduces stablecoins to Africa.

As South African authorities prepare to intensify oversight of cryptocurrency market participants, major companies like Ripple are introducing their stablecoins to the African continent.

Experts argue that the region requires stable financial instruments on the blockchain for the hundreds of millions without banking access, rather than speculative assets.

Oversight of Crypto Traders

The South African Revenue Service (SARS) is ramping up its efforts to combat tax evasion in the digital assets sector, reports a local publication. The agency has doubled the staff of its dedicated department to recover billions of rand from investors.

The tax agency is reportedly set to employ AI to automate administrative decision-making processes.

According to Reuters, South Africa’s budget deficit is expected to reach 4.7% of GDP in the fiscal year 2025/26. To address the shortfall, the government is urging SARS to broaden the tax base. The agency aims to collect an additional $2.8 billion this year, with the cryptocurrency sector being one of SARS’s targets.

However, according to Karel de Jager, CEO of blockchain company Silver Sixpence, only 17,000 (0.28%) of the 6 million digital asset holders in South Africa have declared their holdings.

He attributes this discrepancy to the industry’s mistaken belief that it operates outside the legal framework.

“This is a major misconception, and SARS is definitely monitoring the crypto sphere. Many people may receive letters soon,” he stated.

Jager noted that over the past three years, SARS has significantly improved its tax guidance, although it was previously criticized for its absence. Nonetheless, he acknowledged that cryptocurrency taxation remains complex.

Ripple in Africa

Ripple has partnered with payment services Chipper Cash, VALR, and Yellow Card to promote the RLUSD stablecoin in Africa.

“We are seeing demand for a ‘stablecoin’ from our clients and other key institutional players worldwide and are excited to begin its distribution in Africa through local partners,” said Ripple’s Senior Vice President Jack McDonald.

Representatives from Chipper Cash, VALR, and Yellow Card emphasized the importance of offering clients a regulated and reliable digital dollar for cross-border payments and treasury management.

Ripple noted that RLUSD is suitable for several use cases, including instant cross-border settlements, access to liquidity for remittances, integration with DeFi protocols, and collateral provision for trading tokenized assets.

The stablecoin is also used in pilot projects by the humanitarian organization Mercy Corps Ventures in Kenya. In one project, RLUSD serves as drought insurance for farmers, and in another, it provides payouts during extreme rainfall.

Africa Needs Blockchain Banking

Jibril Mohamed Ahmed, founder of the blockchain bank Flamingo, believes that Africa does not need speculative cryptocurrencies. In his view, they do not address the issues faced by 500 million people on the continent without banking access. Real benefits will come from blockchain-based financial instruments, not “hype and show business.”

Ahmed described cryptocurrencies as “volatile, risky, and complex” instruments. He doubts they will help residents obtain identification, access credit, or create savings.

“Africa needs stability, not a rollercoaster,” he stated.

Ahmed noted that traditional banks also cannot effectively serve the population. He cited a McKinsey report indicating that the costs of opening branches and maintaining infrastructure in rural areas make such operations unprofitable.

Ahmed argues that crypto platforms like Binance were not created for Africa. They require high digital literacy and constant internet access, which only 43% of the continent’s population has. He also pointed to regulatory challenges.

Ahmed sees the solution in blockchain-based digital banking. According to him, such systems can provide identity verification, secure payments, and loans at lower costs than traditional banks. Unlike speculative tokens, blockchain banking offers practical financial tools that operate within existing laws.

In conclusion, Ahmed emphasized that the future of Africa’s financial system lies in decentralized and accessible solutions.

In July, Algerian authorities enacted a law that directly criminalizes any form of cryptocurrency use, exchange, or mining.

ForkLog explored how South Africa became a crypto leader on the continent.