South Africa followed a different path when compared to the rest of Africa. Is crypto asset mining allowed in South Africa? Yes.

However, the proceeds of Bitcoin Mining activity are subject to relevant tax and exchange control regulations and legislation.

The popular Bitcoin Wallets reviewed for South Africa are 1. To trade BTC with ZAR: Luno Wallet. 2.  Multicurrency: Edge Wallet.  3.  Lightning Support: Blue Wallet.  4.  Desktop: Exodus Wallet. 5.  Green Address Wallet.  6.  Cold Storage: Ledger Wallet.  7.  Privacy: Wasabi Wallet.

However, South Africa has witnessed two of the largest cryptocurrency scams in 2021.  About $4 billion has been stolen from investors.

Mirror Trading International scammed off $170 million in January.  They promised investors with 10% returns and eventually absconded.

Africrypt founders allegedly absconded with $3.8 billion in April, claiming the platform has been hacked.

The regulators in the country are now racing to put in new regulations before another scam hits. They are planning to regulate the cryptocurrency industry in a phased manner.  The first move they will work with is to establish proper know-your-customer (KYC) norms for crypto exchanges. Then, they are set to create systems further to prevent money laundering.  This is likely to be different from what South Korea is expected to do right now.

In the second phase of regulation, they are likely going to come out with investor-protection guidelines along with rules for managing the risk that banks are facing.

An intergovernmental Fintech Working Group stated, “Crypto assets will be brought into the South African regulatory purview in a phased and structured manner.”

The organization reportedly published a position paper that consists of 25 recommendations and an outline of a possible regulatory framework that includes the need for better financial literacy for consumers as the retail interest in digital currency is growing.

The Financial Services Conduct Authority (FSCA) is looking to categorize cryptocurrencies as financial products, which might put them under the purview of the regulatory body.

In terms of investigation, they had evidence about crypto-asset transactions. However, since crypto assets are not regulated in terms of any financial sector law in South Africa, the FSCA is not in a position to take any regulatory action.

The South African authorities have warned their public about the ‘high-risk nature of investing in crypto-assets, and they have expressed their concerns about the suitability of crypto assets as an asset class due to the ‘underlying business models’ of crypto firms and the ‘risk of large fluctuations in the market price.’

The FSCA will have its hands tied if another crypto exchange will pull the rug out from under investors. If cryptocurrencies were classified as financial assets, then the FSCA will investigate them.