South Africans with Bitcoin under siege

South African crypto holders are facing increased scrutiny as new international reporting rules and proposed regulations give SARS and the government greater visibility and control over cryptocurrency assets.

Effective from 1 March 2026, South Africa adopted the Crypto Asset Reporting Framework (CARF), increasing the visibility of global cryptocurrency transactions.

Unicus Tax Specialists founder Nico Theron said there is now pressure on taxpayers to declare their crypto assets, and they should do so.

“Having said that, taxpayers must not think they can cherry-pick what they want to declare, given the greater visibility on crypto assets,” he said.

The CARF is an international tax transparency standard developed by the Organisation for Economic Co-operation and Development (OECD).

Its goal is to enable the automatic, annual exchange of cryptocurrency transaction data between global tax authorities.

Taxpayers should also take note of the Draft Guide to the Taxation of Crypto Assets published by the South African Revenue Service (SARS) at the beginning of this month, Theron said.

“The message is clear that SARS has greater insight into international cryptocurrency movements, and it is telling taxpayers how it intends to tax the transaction,” he said.

Taxpayers who declare crypto assets for the first time in their 2025/26 tax return will likely be exposed to an audit.

Once that happens and SARS identifies past, undeclared crypto transactions, the door to the Voluntary Disclosure Programme (VDP) will close, Theron warned.

“If you choose to sweep the past under the carpet and SARS selects you for an audit, which they most probably would, the window of opportunity to apply for leniency under the VDP is no longer available,” he said.

For taxpayers who choose this route, relief from penalties and potential criminal prosecution will be off the table.

Theron advised taxpayers with historic undeclared crypto assets to declare them – with the necessary guidance – under the protection of the VDP before submitting their 2026 tax returns.

The deadline for provisional taxpayers is 22 January 2027. However, it will be crucial to prepare the necessary supporting documentation for a VDP application as soon as possible.

“That is the correct approach,” Theron said. “Taxpayers should not assume that their crypto activity will remain unnoticed.”

A confusing issue regarding the taxation of crypto assets remains the subjectivity in the capital revenue test, Theron explained.

The same rules apply to crypto transactions when determining whether it is capital or revenue in nature. The golden thread is the taxpayer’s intention when acquiring the asset.

Buying an asset to use or hold as a long-term investment indicates a capital nature, while buying it to resell quickly at a profit indicates a revenue nature.

If the acquisition, holding, and sale of the crypto were speculative, it would be treated as revenue, triggering income tax.

However, if they were for capital growth, it would be treated as capital, triggering capital gains tax. One test is the regularity or frequency of the transactions.

South Africa’s crypto landscape is changing

As the government seeks to bring the crypto sector under tighter control, South Africa’s approach to these assets is changing in ways that have raised concerns among some economists.

The National Treasury’s proposed Draft Capital Flow Management Regulations will bring certain crypto assets into the country’s foreign exchange control framework.

This will require South African residents to declare crypto holdings above a certain threshold and, in some cases, offer the assets for sale to the Treasury or an authorised dealer.

Some economists argue that the government is trying to apply traditional financial controls to technology that was designed to operate outside the traditional financial system.

Solidarity Research Institute economic researcher Theuns du Buisson is among those who have raised flags about the proposed regulations.

He explained that it could make South Africa less attractive to foreign investors by creating additional barriers to moving money into and out of the country.

Efficient Group chief economist Dawie Roodt similarly warned that increasingly strict controls could encourage people to look for alternative financial technologies and currencies.

As cryptocurrencies become more widely used in South Africa, the country faces a growing challenge regarding how the sector should be regulated.

On one hand, the government wants greater oversight to combat fraud, money laundering and other financial crimes.

On the other hand, overly restrictive rules could discourage investment and push users towards financial systems that are harder for authorities to monitor.

For taxpayers and investors, the changing regulatory environment means crypto assets are likely to face greater scrutiny in the years ahead.