South Africa is perhaps the leading country in Africa in terms of cryptocurrency adoption. Bitcoin trading and investments have become popular in South Africa, with several companies offering buying and trading services in the country. Despite the options available, some people still do not know how to buy Bitcoin in South Africa. This guide will make it easy to buy Bitcoin and other cryptocurrencies in the country.
Table of Contents
Buying Bitcoin in South Africa from Exchanges
Legislation
South Africa, similar to most countries in the world, is yet to regulate the cryptocurrency sector properly. Cryptocurrency exchanges and trading platforms are operating in the country without proper regulation and legislation. Due to the lack of proper regulation, it makes it tough for companies in the country to operate in the cryptocurrency trading service sector.
However, despite the shortcomings, South Africa is working towards changing that stance. The top financial regulators in the country, including the South African Reserve Bank, released 30 recommendations for the regulation of digital currency and related service providers earlier this year. The regulators wish to roll out rules that are in line with the cryptocurrency standards set by the Financial Action Task Force (FATF).
Once regulations for cryptocurrencies are rolled out, more companies will find it easier to enter into the space and to provide services to South Africans. It could also lead to a larger involvement from institutional investors, and this will help the cryptocurrency sector to grow over the coming years.
Despite the lack of proper regulation, some trading platforms and exchanges make it easy to buy Bitcoin in South Africa so let’s explore these in more detail.
Luno
Luno is one of the leading platforms to buy Bitcoin in South Africa. They allow users to buy and sell leading cryptocurrencies such as Bitcoin, Bitcoin Cash, Ethereum, and Ripple (XRP). Luno offers its services to other leading African countries such as Nigeria. Although not regulated, Luno complies fully with the anti-money laundering (AML) and know-your-customer (KYC) processes set to guide financial market service providers.
| Pros | Cons |
| Easy to buy Bitcoin using fiat currencies | Tools offered are not suitable for active traders |
| Supports Bitcoin and a few other cryptos | They operate a custodial wallet (your private keys are stored by a third party) |
| Supports multiple payment methods | |
| Available in developing countries |
LocalBitcoins
LocalBitcoins is a peer-to-peer digital currency exchange that allows people to buy Bitcoin with ease. The job of the platform is to connect buyers and sellers and allow them to transact directly. The Finland-based company is a regulated entity that follows the new Act on Virtual Currency Service Providers. As such, LocalBitcoins deploys AML and KYC procedures during customer registration.
| Pros | Cons |
| Buyers and sellers are readily available | Customer support is slow |
| Highly secure platform | U.S clients not accepted |
| Competitive fee structure | |
| Various payment channels available |
CoinCorner
CoinCorner is one of the best and easiest places to buy Bitcoin in the U.K. and Europe with a credit card or debit card. The company has extended its services to a few other countries, including South Africa. The British-based Bitcoin exchange based in Douglas, Isle of Man, was given federal regulatory compliance by the Isle of Man Financial Services Authority in 2016. It was the first crypto company to receive such as status on the island.
| Pros | Cons |
| It is a regulated crypto exchange | High transaction fees |
| Supports the use of credit/debit cards | No advanced features |
| Wallet and exchange are combined for convenience | Low limit hampers trading |
| Simple trading platform |
Kraken
This is a San Francisco-based cryptocurrency exchange that makes it easy for South Africans to buy Bitcoins. They can also sell and trade the cryptocurrency on the platform. Founded in 2011, Kraken is one of the oldest crypto exchanges in the world still operating. Kraken is also registered as a Money Services Business (MSB) with FinCEN in the USA, FINTRAC in Canada, and it is regulated by the Australian Securities & Investments Commission.
| Pros | Cons |
| It is a regulated platform | Low leverage |
| Low trading fees | High deposit fees for some users |
| Allows Bitcoin and other crypto trading | |
| High liquidity | |
| Various deposit and withdrawal options |
Coinswitch
Coinswitch is a popular platform for South Africans to buy Bitcoin anonymously. The platform allows users to buy, sell, and trade Bitcoin and over 300 other cryptocurrencies without creating an account on any exchange. At the moment, Coinswitch is not a regulated cryptocurrency trading platform.
| Pros | Cons |
| Allows BTC trading and 300 other cryptos | The platform is not regulated |
| Excellent customer support | Varying trading fees |
| Supports BTC purchase anonymously | |
| Various payment options | |
| Easy to use |
Paxful
Paxful is similar to LocalBitcoins in that it is a peer-to-peer platform that connects buyers and sellers from all parts of the world. South Africans can buy Bitcoin easily on Paxful and pay for it using the South African rand (ZAR). At the moment, the New York-based company is not a regulated cryptocurrency exchange, but it follows the AML and KYC guidelines.
| Pros | Cons |
| Numerous payment options | Unregulated platform |
| I.D. and biometric verification | No phone support |
| Fixed transaction fees | |
| Instant purchase of Bitcoin and other cryptos |
Buying Bitcoin in South Africa from Brokers
A rising trend in the cryptocurrency sector is buying Bitcoin from brokers. Brokerage platforms offer a different way to buy Bitcoin in South Africa. Unlike cryptocurrency exchanges where you would buy and own the cryptocurrencies, you will simply speculate on them when you trade Bitcoin and other cryptos from brokers. This is because, with cryptocurrency brokers, you are simply trading Bitcoin CFDs or contracts for differences. That is, you are simply making a prediction regarding the direction the price of the crypto will move. Here you can make money even when the price of a cryptocurrency declines.
Thanks to the advent of brokers, cryptocurrency investment has become easier. Traders do not have to bother with spending huge amounts on digital wallets to save their BTC stash as the broker provides access to a trading platform where one can trade cryptocurrencies. Instead, traders can focus on investing and speculating on the price of Bitcoin and other cryptos when trading with a broker.
IC Markets
IC Markets is a leading brokerage platform that grants people access to the financial markets. Users can trade a wide range of assets, including cryptocurrencies, forex, stocks, bonds, commodities, indices, and futures. I.C. Markets is authorized and regulated by the Australian Securities and Investments Commission (ASIC).
| Pros | Cons |
| Low trading fees | No negative account balance protection |
| Easy to use platform | Zero investor protection |
| Free deposits and withdrawals | |
| Supports BTC and other cryptos |
READ FULL IC MARKETS REVIEW HERE
eToro
eToro is one of the global leading social trading brokerage platforms. It allows people to buy Bitcoin with ease, using multiple payment options. With eToro, it is easy to make money as the platform allows you to copy the trades of other professionals. eToro is regulated by the CySec and the FCA in the U.K.
| Pros | Cons |
| Low trading fees | Slow fund withdrawal process |
| Free stock and ETF trading | Single base currency |
| Social and copy trading options |
READ FULL ETORO REVIEW HERE
FP Markets
FP Markets is an Australian Securities and Investments Commission (ASIC) regulated broker. The Australian-based broker allows South Africans to buy and sell Bitcoin on its platform. It also offers them access to other financial assets such as forex, metals, commodities, and indices.
| Pros | Cons |
| Supports Bitcoin trading | Limited product portfolio |
| Low forex trading fees | High stock trading fees |
| Quick deposits and withdrawals |
READ FULL F.P. MARKETS REVIEW HERE
Easy Markets
Easy Markets is another broker that allows South Africans to buy Bitcoin with ease. It is regulated in Cyprus and licensed under the very rigorous ASIC regulator in Australia. Easy Markets have become popular for allowing people to access over 200 global markets and providing tools to help traders excel and trade accurately.
| Pros | Cons |
| Welcome bonus available | Absence of cent account, VPS and forex calculators. |
| Supports BTC trading | Not supported in some major countries |
| Responsive and professional client support | |
| Innovative trading platform with excellent features |
READ FULL EASY MARKETS REVIEW HERE
IG Markets
I.G. Markets is a London-based broker that is regulated by the FCA and is publicly listed on the London Stock Exchange. This global broker allows you to buy Bitcoin in South Africa using various payment options. They allow users to trade other financial assets such as forex, indices, stocks, and commodities.
| Pros | Cons |
| No withdrawal fees | Charges inactivity fees |
| Low indices trading fees | High stock trading fees |
| Supports BTC trading |
READ FULL I.G. MARKETS REVIEW HERE
Buying Bitcoin in South Africa from an ATM
The cryptocurrency sector continues to differ from the traditional financial sector in several ways. Bitcoin ATMs, unlike regular ATMs, are used for buying and selling BTC with local fiat currencies. Their advent has made it easier for people to buy Bitcoin in South Africa using the South African rand.
There are several Bitcoin ATMs in South Africa and more are installed annually. Currently, four cities in South Africa have Bitcoin ATMs. Pretoria is the leader and has two Bitcoin ATMs. The city is followed by Johannesburg, Cape Town, and Nelspruit, each with one Bitcoin ATM. The Bitcoin ATMs allow you to buy or sell BTCs with ease. It allows you to instantly buy Bitcoin up to 5,000 rand. Any amount above that would require the user to carry out a brief I.D. verification process at the machine.
| Pros | Cons |
| Offers transactional speed | High transaction fees |
| Familiar and comfortable | Unavailable in many locations |
| Secure | Technical issues may occur |
Bitcoin Taxation in South Africa
Bitcoin earnings are taxed in South Africa. In January 2019, the Cyril Ramaphosa government made changes to the Taxation Laws Amendment Act, which affected how Bitcoin and other cryptocurrencies are treated for tax purposes.
One of the signed changes implies that all cryptos are to be treated as financial instruments. This means that they are categorized in the same group as futures contracts, promissory notes, and derivatives because of the underlying commodities.
In the past, South Africa regarded Bitcoin and other cryptocurrency transactions as normal share trades. This implied that if you were trading to earn revenues, then gains and losses would be taxed as a revenue transaction, just like a salary. However, those holding BTC for investment purposes, will be treated as normal capital gains when they sell it.
Since last year, the trading of Bitcoin is now regarded as a hobby or lifestyle activity in South Africa. The regulation has two major implications. Those that trade BTC as a hobby instead of serious trading activity will see losses from such activities offset against the profit they make. Secondly, it does not allow citizens to reduce the amount of tax they will pay on any other income.
Why Invest in Bitcoin?
South Africa, just like several other African countries, has been plagued by financial and political instability over the years. These challenges are known to affect economic developments within a country and ultimately lead to a loss of wealth due to inflation and other derogatory issues. To protect your wealth in South Africa, it is best to invest in safe-haven assets, and Bitcoin happens to be the best and most lucrative one at the moment. Bitcoin has delivered far better return on investment over the past decade than any other asset in the world.
The growing adoption of Bitcoin in the global financial market is expected to make it an even more valuable asset. Hence, investing in Bitcoin at the moment would help you protect your wealth and grow it despite the economic and political challenges in South Africa.
