You can buy and sell Bitcoin in South Africa through a reputable Bitcoin exchange. Access the exchanges via your personal computer or Smartphone using the relevant mobile app.
Once you have signed up for an account and it is verified, you need to obtain a Bitcoin wallet which you use for your Bitcoin transactions. It’s possible to transfer funds from any of the major financial institutions in South Africa to a Bitcoin exchange and you can start trading as soon as the funds are cleared. You have the choice of keeping your bitcoins in the exchange or transferring them to your personal Bitcoin wallet.
IS IT LEGAL TO BUY AND SELL BITCOIN IN SOUTH AFRICA?
Yes, it is legal to buy and sell Bitcoin in South Africa. The South African Reserve Bank (SARS) has issued warnings regarding the risks associated with trading in Bitcoin but there is no actual ban on any form of cryptocurrency trading. SARS makes it clear that any earnings from these trades are subject to taxation.
Cryptocurrency trading in South Africa is currently unregulated but the government is working on a new regulatory framework to more stringently control the cyber-banking industry.
6 WAYS TO BUY BITCOIN IN SOUTH AFRICA
- Buy Bitcoin using a Bitcoin exchange
Do your research and select a Bitcoin exchange that is regarded as reliable, secure and trustworthy. Bitcoin exchanges such as Luno allow you to deposit fiat funds from a bank account into a Bitcoin wallet to transact in the digital currency. Bitcoin exchanges are regarded as the safest and most secure way to buy and sell Bitcoin and other cryptocurrencies such as Ethereum.
- Buy Bitcoin with a credit or debit card
It’s possible now to buy Bitcoin using a credit or debit card. You still need to go through a reputable Bitcoin exchange such as Luno where you add your card details in the system and transfer money electronically once the card details have been verified. Credit card fees apply which makes it a slightly more expensive way to buy Bitcoin.
- Use a BTM/VTM (Bitcoin ATM)
There are not many BTMs in South Africa currently but they are available in some of the major cities. This is a vending machine that works in much the same was as an ATM. You need to have a Bitcoin wallet loaded on your Smartphone which generates a QR code that the BTM reads. You can use a BTM to deposit funds to purchase Bitcoin but you can’t use a BTM to withdraw money earned from selling Bitcoin.
- Get paid in Bitcoin
Bitcoin is growing in popularity as a payment method for goods sold and services rendered. Money owed is paid into a Bitcoin wallet which you obtain through a reputable exchange such as Luno. The most popular payment gateway provider for Bitcoin transactions is PayFast. This facility allows people to pay in Bitcoin which is then converted to Rands.
- Join a Bitcoin trading community site
There are a few reputable cryptocurrency platforms that provide you with the opportunity to connect with people who are buying and selling Bitcoin privately. You can trade through a reputable website or meet in person and pay cash for the purchase. Be careful of falling victim to a Bitcoin scam.
- Mine Bitcoin
Many South Africans have got into the complex process of mining Bitcoin. This is largely done through Bitcoin syndicates as massive investment in the processing technology is required for Bitcoin mining. Bitcoin mining involves securing the network and verifying transactions and successful miners are paid in Bitcoin. It’s not hugely profitable but if you’re technologically inclined, you’ll find the process fascinating.
BITCOIN EXCHANGES IN SOUTH AFRICA
The two oldest exchanges in South Africa that have stood the test of time and can be trusted with Bitcoin transactions are Luno and ice3X (IceCubed). Both exchanges accept deposits from your bank account or card payments. Once the funds are cleared, you can immediately buy or sell Bitcoin through the exchange.
Bitcoin is slowly being accepted by vendors as a method of payment but it’s a long way off from being used for daily transactions. Any customer who is registered with PayFast (payfast.co.za) can accept Bitcoin through the PayFast gateway for a fee and South African Rands are deposited into a bank account.
There are less than 10 Bitcoin ATMs in South Africa but the number is growing. These cash machines have been dubbed BTMS (Bitcoin Teller Machine) or VTMS (Virtual Teller Machine). At this stage, you can use a BTM to deposit funds in your digital account but you can use it to withdraw funds. BTM fees are high, at around 10% per transaction.
Luno regularly updates its list of merchants in South Africa that accept Bitcoin as a method of payment. You can see from the diverse spread of merchants that Bitcoin is becoming more widely accepted in South Africa for regular transactions.
Takealot.com was an early adopter of Bitcoin and allows its customers to use the digital currency to buy products on the massive online shopping site. This is done through PayFast which is the instant EFT payment method that Takealot uses. Other large online shopping sites have followed in its lead.
STEP-BY-STEP GUIDE TO BUYING BITCOIN IN SOUTH AFRICA ??
Luno is one of the most popular and trustworthy Bitcoin exchanges in South Africa so let’s look at their process as an example of how to set up an account and start trading in Bitcoin.
Luno is a digital platform where you can buy, sell, store and trade Bitcoin and Ethereum. Through Luno, you can buy Bitcoin using fiat money electronically transferred from your bank account and you can sell your Bitcoin and transfer the money directly to your bank account.
Step 1: Sign up for an account with Luno
Sign up for a free Luno Wallet via the web, iOS or Android and follow easy instructions to register, set up your profile and redeem the promo code.
You sign up by using your personal/business email address and password. Input the latter and then go to your email inbox to pick up a confirmation email sent to you by Luno.
Select ‘Confirm email address’. You are then taken back to the Luno website.
Select ‘Continue’. You are now registered for a Luno account.
Step 2: Verify your account
Select ‘Settings’ in the menu bar
Select ‘Upgrade’ to link to the Personal details page
Complete the steps by adding your details. This involves submitting digital copies of your ID, proof of residence and bank statement.
When your personal details have been verified by Luno, your account will be upgraded from Level 0 to Level 1, 2 or 3 depending on the deposit and withdrawal level you specify.
- Level 0: your account and personal details have not yet been verified
- Level 1: your account is verified and limited to a total of R15 000 for deposits and withdrawals
- Level 2: your account is verified and limited to R50 000 for deposits and withdrawals
- Level 3: your account is verified and no limit is set for deposits and withdrawals
Step 3: Deposit money into your account
When your account has been verified, you are able to immediately deposit money into the account and buy Bitcoin. When your deposit has cleared in your Luno account, it will show up in the digital wallet.
Select ‘Wallets’ to make a deposit.
Select ‘Deposits’ at the bottom of the wallet link.
Select your preferred bank from the list of main banks in South Africa listed on the site.
Select ‘Next’ to instruct Luno on how much money you will deposit into your account.
A reference number will appear on the screen. You need this reference number as well as the Luno banking details to proceed with making a deposit. Use the Luno banking account and reference number (beneficiary reference) to do an electronic transfer from your regular bank account to your Luno bank account.
The funds you transfer will appear in your Bitcoin wallet once they have been cleared. This usually takes 2 working days. Once the funds appear in you Bitcoin wallet, you can buy Bitcoin.
Step 4: Buy Bitcoin with ‘Instant Buy’
The ‘Instant Buy’ feature on Luno is the fastest and easiest way to buy Bitcoin in South Africa. However, there is a fee for this facility so it does cost you more. A cheaper option is to place a ‘Buy order’ through Luno.
Select the ‘Buy/Sell’ button on the Luno screen. You are able to switch between Bitcoin (BTC) and Rand to transact. Use BTC to indicate the amount you want to buy; and ZAR to indicate the amount you want to spend.
Select ‘Buy’ to complete the order.
Step 5: Place a ‘Buy Order’ on the exchange to buy Bitcoin
Select ‘Exchange’ to go through to the ‘Buy Order’ feature.
Select ‘Place Order’ to activate a ‘Buy Order’ request where your order to buy will be matched by a person’s order to sell.
Any outstanding amount that is not matched in a ‘buy/sell’ order will remain in your account and is available to be matched with other ‘buy/sell orders’ until the whole amount has been spent.
Select ‘Place Buy Order’ when you are ready to buy the Bitcoin. When you have confirmed the transaction, your Bitcoin and ZAR balance will be updated. The BTC indicates how much Bitcoin you have purchased and ZAR indicates how much you spent.
HOW TO GET A BITCOIN PROMO CODE
Sign into your Luno account and select ‘Rewards’. – click here
A personal invitation code will appear as well as an instruction to ‘Invite Friends’.
Select ‘Invite Friends’ and the social media platform you’d like to share the invitation on (either Facebook or Twitter).
You can also copy the unique ‘Invite Friends’ link and share it via email, on your personal website or WhatsApp.
If the friend(s) you sent the link to registers an account with Luno, you are rewarded in Bitcoins.
HOW TO GET A BITCOIN WALLET ADDRESS
You can generate as many Bitcoin wallet addresses on Luno as you want. Follow these simple steps to obtain a Bitcoin wallet which you need to buy, sell, store and transact the digital currency.
Log into your Luno account
Click on ‘Receive’ if you are accessing Luno from the website
Click on ‘More’ if you are using the Luno mobile app before you can click on ‘Receive’
Select the digital currency you want (Bitcoin or Ethereum)
Click on ‘Add address’ if you are accessing Luno from the website
Click on the ‘+’ sign if you are using the Luno mobile app
You will be instructed to label the address you require. Input a relevant name.
Click on ‘Create’ and a BTC address will be generated for you by Luno.
A BTC address is a string of 26-35 letters and numbers that identifies your Bitcoin wallet. It begins with either a 1 or a 3 and is case sensitive. This is the address you provide people who transact using Bitcoin.
BITCOIN IN SOUTH AFRICA
South Africa has adopted Bitcoin as an alternative currency on an impressive scale. It’s believed to be largely due to the political and economic uncertainty in the country, where South Africans are looking for an alternative investment option to protect themselves. In particular, one that is not heavily regulated and can be transacted instantaneously.
In fact, Africa as a whole has taken a big interest in Bitcoin as well as other popular cryptocurrencies such as Ethereum and Litecoin. Nigeria and South Africa are ranked as first and second-most heaviest consumers of Bitcoin respectively. A study conducted by Luno revealed that South Africa leads many European countries in crypto adoption.
According to Luno’s study, close to 70% of the South African respondents surveyed were aware of the digital currency trend and almost 30% had bought Bitcoin. This dwarfed awareness and purchase levels in other countries surveyed, such as Germany (49% and 9% respectively) and France (37% and 19% respectively).
IS BITCOIN LEGAL IN SOUTH AFRICA?
Buying and selling cryptocurrency in South Africa is legal but it is currently not regulated.
The South African Reserve Bank (SARB) has issued a formal statement that it “does not oversee, supervise or regulate the virtual currency landscape, systems and intermediaries for effectiveness, soundness, integrity or robustness” and has issued a warning highlighting the risks associated with investing in virtual currencies such as Bitcoin and Ethereum.
SARB notes that Bitcoin falls outside of the definition of legal tender and any payments made via Bitcoin in South Africa “may not discharge a debtor of a monetary obligation and purchasers run the risk that their Bitcoin payments are not recognised by South African law”. In short, SARB deems transactions performed to be “at the end-user’s sole and independent risk and have no recourse to SARB”.
SARB further notes that Bitcoin and all other virtual currencies are “not defined as securities in terms of the Financial Markets Act, 2012 (Act no. 19 of 2012) and are not subject to regulatory standards that apply to the trading of securities”.
SARB also issues a warning that any profits made through Bitcoin transactions are subject to taxation.
REGULATIONS GOVERNING BITCOIN IN SOUTH AFRICA
As of end 2019, strict regulatory laws governing cryptocurrency trading in South Africa were largely non-existent. This stands apart from tax regulations and AML/KYC compliance (AML meaning Anti-Money Laundering and KYC meaning Know Your Customer).
A consultation paper has been drafted by SARB that promises to enforce hefty regulations surrounding Bitcoin exchanges and BTM/VTMs but the country appears to still be a long way from nailing down the specifics. It’s argued that a new regulatory framework will need to be developed as virtual currencies do not fit in with the current regulatory framework.