FinTech

South African Reserve Bank Celebrates Blockchain Payment Pilot Success

 South African Reserve Bank (SARB) launched a report on Project Khokha. The project is a ‘proof-of-concept’ that is designed to simulate a ‘real-world’  trial of a distributed ledger technology (DLT)-based wholesale payment system.

As per blockchain principles, the daily volume of payments in South Africa can take place in two hours with full confidentiality and settlement finality.

In a statement, the bank said, “Central banks widely recognise the disruptive potential of and the probable risk from fintech. This prompted the SARB to initiate structures to monitor and gain insight for the development of appropriate policy frameworks and responses to changes emanating from fintech. The first of these
structures is the the FinTech Unit which was established during August 2017 to assess the emergence of fintech in a structured and organized manner and to consider its regulatory and strategic implications.”

The bank noted, that its pilot project was based on the initiative built by other banking institutions around the world, using blockchain technology.

SARB said, “One objective of Project Khokha is to provide a better understanding of how South African Multiple Option Settlement (SAMOS) system would integrate with a DLT system. The intention is not to consider changing the approach with the SAMOS replacement, but to provide input to that project.”

In a statement the organization had said, “The South African Revenue Service (SARS) will continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income. The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.”

It added that, there was an existing tax framework that can guide SARS and affected taxpayers on the tax implications of cryptocurrencies, making a separate Interpretation Note which is unnecessary for now.