Are you looking to buy Bitcoin overseas?
South Africans are taking advantage of a pricing disparity that exists between overseas Bitcoin Exchanges and South African Bitcoin Exchanges. They’re not trading, investing or speculating in Bitcoin – they’re purely buying it overseas where its cheap and selling it locally where it’s expensive.
Understanding arbitrage
Arbitrage isn’t a new money-making concept. Many financial assets trade on different platforms at different prices, meaning they can be purchased in one country at a particular price and then sold at a premium in another country. Crypto currency enthusiasts have been taking advantage of this for some time, especially in South Africa where the price gap can vary by as much as 10% versus foreign markets.
How to Buy Bitcoin Overseas from South Africa
A South African investor buys crypto on a foreign platform and then transfers that crypto to a local wallet held in South Africa with a local platform provider.
A South African can buy Bitcoin on one of the well know foreign Bitcoin exchanges like Kraken or Bitstamp using USD or EUR. Opening an account with one of theses exchange is fairly quick and easy and can be done online. They’ll ask for all the usual compliance information like proof of identity and proof of address which you can upload directly into their platform in order to get verified.
At the same time, you’ll need to open a local VALR, DCX or Luno account in SA to receive and sell the Bitcoin you buy overseas. Bitcoin prices trade higher in South Africa, so any Crypto you buy overseas can be sold here locally for a lot more, yielding a nice little profit for very little effort.
The challenge
The challenge that arbitrage investors face is the transfer of Rand from South Africa to these international platforms. Under Exchange Control regulations, South Africans can only transfer up to R1-million per year as part of their annual single discretionary allowance or up to R 10M if using their foreign capital allowance. Anything over R1M and you’ll need a tax clearance certificate from SARS.
International money transfers for crypto arbitrage
As a South African resident, you’re allowed to transfer up to R1m per year as part of your annual discretionary allowance. You don’t need a tax clearance certificate or Reserve Bank approval as long as it’s under R 1M. This limit also gets reset at the beginning of Jan every year. FX Paymaster offer a Smarter, Faster, Easier & Cheaper way to transfer money abroad. Using your foreign investment allowances, we can assist you with cost-effective foreign currency purchases that you can use to purchase Bitcoin abroad.
SARB clamping down on Bitcoin transfers
Buying and selling Bitcoin to take advantage of the arbitrage opportunity is perfectly legal providing you comply with South African Exchange Controls. From a regulatory perspective, the South African Reserve Bank (SARB) is aware of the emergence of crypto arbitrage trading and is putting pressure on banks to carry out enhanced due diligence on transfers related to cryptocurrency purchases.
Your Foreign Exchange allowances are not transferrable, and it is strictly prohibited for a resident to directly or indirectly use the allowances of another resident. Unused allowances can also not be rolled over to subsequent years.
