There is an interesting tension arising from crypto as a payment system. The technology is making payments easier, but the the tax treatment can make them a bit more complicated. 𝗟𝗲𝘁 𝗺𝗲 𝘂𝘀𝗲 𝗦𝗼𝘂𝘁𝗵 𝗔𝗳𝗿𝗶𝗰𝗮 𝗮𝘀 𝗮𝗻 𝗲𝘅𝗮𝗺𝗽𝗹𝗲, South Africa implemented the OECD’s Crypto-Asset Reporting Framework (CARF) on 1 March this year. Crypto-asset service providers are now collecting transaction data that will be reported to SARS. But CARF itself doesn’t create a new crypto tax. The existing tax rules still apply here. That means spending crypto can create a taxable disposal. For example, if you bought Bitcoin at R500k and later spend it when it’s worth R1m, you may have a taxable gain. Also, transactions can create additional record-keeping requirements. 𝗠𝗔𝗞𝗜𝗡𝗚 𝗣𝗔𝗬𝗠𝗘𝗡𝗧𝗦 This is one reason I find the growing use of stablecoins for payments so interesting. If you buy a dollar stablecoin for $1 and spend it around $1, the gain or loss is generally negligible. But because SARS taxes in rand, movements in USD/ZAR forex can still create a small gain or loss. Bitcoin is different though. If it has appreciated significantly since you bought, spending it can crystallise a much larger taxable gain. So personally, I’d rather keep my Bitcoin and spend stablecoins, especially when travelling. 𝗪𝗛𝗔𝗧 𝗧𝗛𝗘 𝗙𝗨𝗧𝗨𝗥𝗘 𝗛𝗢𝗟𝗗𝗦 Interestingly, Japan follows a similar principle. Using crypto to make payments can give rise to taxable income. However, Japan is now looking at reforms to its crypto tax framework, which could make the treatment of crypto more favourable in the future. This is really a fascinating example of how the technology, taxation, and regulation are all trying to catch up with each other.