How to buy Bitcoin in South Africa

Buying your first Bitcoin can be daunting, especially for South Africans who are new to crypto. You need to consider several factors and steps before making an investment. There are complex regulations, tax implications and security considerations before you get to the fun part -— owning Bitcoin (BTC).

If you’re looking to buy Bitcoin in South Africa but want clarity on the rules and how to go about it safely, then keep reading. This step-by-step guide simplifies all the technicalities to walk you through the process so you can confidently buy Bitcoin with ZAR. 

Let’s get started with how to invest in Bitcoin South Africa

Bitcoin regulations in South Africa

Bitcoin is legal in South Africa, and there is growing support for cryptocurrencies among individuals, businesses and the regulatory environment. It’s important to note that Bitcoin is not considered legal tender or money in South Africa. 

The South African Reserve Bank (SARB) views Bitcoin as a digital asset rather than a currency. This means the use and acceptance are not yet widespread in day-to-day life. Many South Africans still invest in Bitcoin by buying, selling and trading it on several platforms and exchanges. 

In fact, 18% of South African internet users under 64 years old hold cryptocurrencies. That’s the highest adoption rate across Africa. By the end of 2024, the South African government had issued 59 operating licenses for crypto businesses. 

The legal status and growing adoption rate show a favorable environment for Bitcoin. The government has also established a regulatory framework to better protect investors against fraudulent activities while still fostering growth and innovation in the sector. 

This regulation includes guidelines for “a digital representation of value,” making crypto a financial product subject to the Financial Advisory and Intermediary Services Act (FAIS). All crypto service providers must be granted permission by the FAIS to operate.  

Did you know? In 2024, South Africa emerged as a leading digital asset hub, driving growth for crypto with forward-thinking regulation and expanding the availability of crypto platforms. Regulation frameworks pave the way for other African nations to follow suit in how Bitcoin is regulated.

Tax implications for Bitcoin in South Africa

As for Bitcoin taxes in South Africa, the South African Revenue Service (SARS) classes it as an intangible asset.  

So, any profits you make from buying and selling Bitcoin are subject to capital gains tax or income tax. If you buy and sell crypto, you must declare your gains and losses on your tax return. 

The rate of tax you will pay is subject to your tax bracket, with the top capital gains rate currently sitting at 18%. Make sure to keep a detailed record of all purchases, sales and crypto-to-crypto trades. 

Did you know? South Africa had about 5.8 million crypto users by the end of 2024. This represents 9% of the country’s total population, with 77% of those owners in the middle-income bracket earning less than $24,000 a year. 

Do nomads pay tax on Bitcoin in South Africa?

Yes, nomads in South Africa are subject to tax on BTC gains under South African tax law. As SARS classifies cryptocurrencies as assets, not currency, profits from disposing of BTC are subject to either income tax or CGT, depending on the nature of the activity.  

If the taxpayer is deemed to be trading in BTC (i.e., frequent buying and selling with the primary intention of making a profit), the gains will be taxed as revenue under income tax. Conversely, if the BTC is held as a capital asset for longer-term investment, the gains will be subject to CGT.

So, even if you’re not officially a resident of South Africa, you could still owe taxes there if you spend a good chunk of time in the country or if the way you’re making money from Bitcoin is seen as being connected to South Africa. 

That’s why it’s essential to keep good records of all your Bitcoin transactions, including dates, how much you traded and the value at the time. Basically, everything! 

If you’re dealing with crypto while in South Africa, a tax adviser could save you a lot of headaches and make sure you’re doing everything by the book.

Choosing a Bitcoin wallet

Before you start Bitcoin trading in South Africa, you must understand how to safely store and transact with it. If you want to own Bitcoin, you’ll need to get a wallet. This is like your “crypto bank account,” where you can receive, hold and send your coins.  

There are several categories of wallets, the most popular being exchange, software, and hardware wallets. Here’s the difference, including several Bitcoin wallet options in South Africa:

• Exchange wallets are built into the crypto exchange platform you use to buy and trade Bitcoin. It works like online banking, where you trust the exchange to secure and hold onto your funds. To access your account, you simply log in to the platform. It’s straightforward but comes with risks. There’s a chance that the exchange could lose or use your funds fraudulently. Plus, scammers could get into your account via poor security procedures. 
• Software wallets, like Trust Wallet or Electrum, allow you to take custody of your Bitcoin and store it directly on your computer or phone. This removes the need to trust a third party like an exchange to look after your funds. With direct control, you can send, store and receive Bitcoin without permission from any organization or government. The downside is that storing crypto on an internet-connected device still leaves you vulnerable to hackers, so it is not ideal for large, long-term storage. 
• Hardware wallets, like Ledger and Trezor, provide a strong balance of self-custody, security and function. They’re like an external hard drive or USB stick to store your Bitcoin offline. This helps protect from hackers; you only need to connect to the internet to send transactions. Still, these are commercial wallets, and security depends upon the safety protocols employed by the wallet providers. 

Did you know? South Africa consistently ranks within the top 10 countries for online searches of Bitcoin and cryptocurrency on Google. 

Where to buy Bitcoin in South Africa

There are several crypto exchanges in South Africa that are regulated and allow you to buy Bitcoin. Before depositing any funds, research your choice thoroughly, ensuring the reputation and legitimacy of a platform. 

Here’s where you can buy BTC in SA:

• Luno: It offers strong support for users in South Africa and ZAR. It is a well-known global crypto exchange that is user-friendly and competitive in fees. The choice of other cryptocurrencies is limited to only the top coins.  
• Valr: This exchange has grown to become a leading operator in South Africa since its 2018 launch. Its platform is suitable for new and experienced traders, with a user-friendly interface and mobile app. 
• OKX: OKX is another popular global exchange with an array of investment choices, including Bitcoin and 300+ other crypto assets. This allows you to explore the crypto ecosystem extensively as you become a more experienced investor. 

Steps to buy Bitcoin in South Africa

Here’s how to buy Bitcoin in South Africa using the Luno exchange:

1. Create and verify your account:

• Sign up for a Luno account on their website or mobile app
• Complete the verification process by providing the necessary documents

2. Deposit South African Rand (ZAR):

• Select the deposit option
• Choose bank transfer through providers like PayU
• Follow the instructions to transfer funds to your Luno account

3. Buy Bitcoin

• Once your deposit is confirmed, use the simple “Buy” feature
• Enter the amount of Bitcoin you want to purchase
• Review and confirm the transaction to complete your Bitcoin purchase in South Africa 

4. Access Your Bitcoin

• Select “Wallets” from the side panel
• Your purchased Bitcoin will be deposited into your Luno exchange wallet
• From here, you can store, trade, or withdraw your Bitcoin as needed

Risks of buying Bitcoin in South Africa

Buying Bitcoin in South Africa offers exciting opportunities but also comes with risks unique to the local economy. 

Let’s learn about what those challenges are:

• Market volatility: Bitcoin’s price swings can lead to significant gains or losses within hours. This is particularly risky in South Africa, where many middle-income earners may invest small but critical savings.
• Regulatory changes: Bitcoin is legal but not considered legal tender in South Africa. Future regulatory updates could affect trading platforms and investor protections.
• Security risks: Cyberattacks on exchanges and wallets can lead to financial losses. South African investors should prioritize secure platforms and multifactor authentication.
• Economic impact: As a growing digital asset hub, Bitcoin adoption can drive financial inclusion in South Africa. However, scams and lack of education could negatively impact trust in the economy.
• Tax compliance: Failing to report Bitcoin gains to SARS can result in fines or penalties. With South Africa’s focus on tax revenue, authorities are increasingly monitoring crypto transactions.
• Fraud and scams: South Africa has seen a rise in crypto-related Ponzi schemes targeting uninformed investors. Verifying exchanges and offers is essential to avoid falling victim.

The South African government’s proactive approach to regulation signals a commitment to fostering a safe and innovative environment for crypto. By staying informed about the evolving regulations, understanding the tax obligations and being aware of the inherent risks, you can confidently navigate the world of Bitcoin in South Africa.