Grace Ashiru
South Africa is experiencing a surge in cryptocurrency options as it approaches issuing its inaugural operational licenses for financial service providers. Payment and fintech companies are leading this trend, paving the way for commercial banks to likely join. Among recent developments is that users can now purchase goods and services using cryptocurrency, and a new option allows them to withdraw digital currency as cash from automated teller machines.
Stitch, a leading payments infrastructure company based in South Africa, introduced a groundbreaking payment solution called “Pay with Crypto.” This innovative method empowers customers to seamlessly utilize cryptocurrency for purchasing goods and services in the South African rand. Users opting for ‘Pay with Crypto’ can either make a deposit or directly complete their cryptocurrency transactions.
Highlighting the significant adoption of cryptocurrency in South Africa, Stitch President Junaid Dadan expressed, “Cryptocurrency adoption in South Africa has been one of the highest in the world. A massive audience would prefer to use their crypto to make payments.” Dadan further emphasized the company’s enthusiasm in allowing Stitch clients to engage and serve this crypto-savvy audience while mitigating direct volatility risks through the ‘Pay with Crypto’ method.
Paycorp, a fintech company based in South Africa, has introduced CryptoExpress, a new app allowing users to convert their cryptocurrency into South African rands and withdraw cash at more than 3,000 ATMs nationwide. The seamless integration with various cryptocurrency wallets enhances user convenience, and withdrawals can be executed at Cash Express ATMs operated by Paycorp’s subsidiary, ATM Solutions. To complete a withdrawal, users simply convert their cryptocurrency through the app, authorize the transaction in their crypto wallet, and obtain a withdrawal voucher PIN generated by CryptoExpress, as outlined in Paycorp’s official statement.
Paycorp, a South African fintech company, has introduced CryptoExpress, an app facilitating cryptocurrency withdrawals in South African rands at over 3,000 ATMs nationwide. The app seamlessly integrates with various cryptocurrency wallets, allowing users to convert their digital assets within the app. Withdrawals can be executed at Cash Express ATMs operated by Paycorp’s subsidiary, ATM Solutions. To access cash, users must convert their cryptocurrency through the app, authorize the transaction in their crypto wallet, and obtain a withdrawal voucher PIN generated by CryptoExpress, as stated in Paycorp’s official release.
Local currency payouts are facilitated for Bitcoin, Ethereum, USD Coin, and Tether. The Financial Sector Conduct Authority (FSCA) in South Africa recently concluded assessments for 36 out of 74 firms initially under consideration. These 36 firms are slated for presentation at the Licensing Executive Committee meeting. Subsequently, 22 additional applications will be reviewed on February 13, with the remaining 14 awaiting consideration until March 12.
As of November 30, 2023, the FSCA has received 128 applications for licenses from crypto asset service providers. By new regulations, South Africa will mandate that crypto companies with foreign headquarters establish a local office.
“For the 10% of entities with an offshore head office, it is crucial to consider the requirements pertaining to establishing a local branch. This is significant as it establishes a physical presence, enabling the FSCA to exert appropriate oversight and ensure accountability for institutions conducting activities in South Africa,” stated the regulator in its recently launched Crypto Assets Market Study.
The FSCA reports that most Crypto Asset FSPs in South Africa are domestically headquartered, with only a minor portion operating from foreign countries. Based on a comprehensive Crypto Assets Market Study involving 47 financial service providers, it is revealed that over half of these FSPs focus on retail customers, primarily centred around crypto exchanges (49%). Notably, the South African cryptocurrency market experienced its highest monthly transaction value in November 2022, reaching over 8 billion rand ($427 million).
Cryptocurrency firms from abroad are expanding their services across Africa, prioritizing countries with significant cryptocurrency adoption and favourable regulatory environments. The Open Platform (TOP), a Dubai-based investment platform, recently announced the global launch of Wallet, a third-party Telegram bot facilitating crypto transactions. The expansion is set to commence in South Africa and Kenya in 2023, with Nigeria slated for the first quarter of 2024, strategically tapping into the robust Telegram user base and escalating crypto adoption rates in these key markets.
Kenya is taking steps to regulate cryptocurrency transactions by recently introducing the Capital Markets (Amendment) Bill of 2023. This bill defines crypto assets as securities and imposes a capital gains tax on them. The proposed legislation, which amends the country’s tax code, aims to levy taxes on cryptocurrency assets held in crypto exchanges and digital wallets. The bill, having passed through a Kenyan parliamentary committee in early December, mandates Kenyans to pay capital gains tax on the increased market value of cryptocurrencies when they sell or use them in transactions. Additionally, the proposed legislation suggests imposing a 20% excise duty on all commissions and fees charged for cryptocurrency transactions.
