For years, a certain mystique surrounded crypto assets in South Africa: a digital wild west where fortunes could be made beyond the prying eyes of the taxman. That party, it seems, is officially over. The South African Revenue Service (SARS) is preparing to roll out a new regulatory regime that promises to give it a front-row seat to every crypto transaction, effectively turning the country’s crypto exchanges into its newest tax deputies.
The instrument of this new order is the Crypto-Asset Reporting Framework (CARF), a global standard cooked up by the Organisation for Economic Co-operation and Development (OECD) to ensure tax transparency doesn’t end where the blockchain begins. A draft of the new rules is now open for public comment until October 3, 2025, giving the industry a final chance to weigh in before the era of plausible deniability comes to a screeching halt.
In essence, the framework will oblige all crypto asset service providers (CASPs) — that’s your exchanges, brokers, and even some wallet providers — to meticulously identify their users and report their transaction data to SARS on an annual basis. It seems the dream of decentralised finance is about to meet the very centralised reality of tax collection.
The New Sheriffs in Town
For South Africa’s crypto platforms, CARF represents a significant operational overhaul. They are being drafted into service as agents of the state, much like employers who dutifully collect pay-as-you-earn (PAYE) taxes.
“The scope is broad, covering not only traditional cryptocurrencies but also stablecoins and certain NFTs,” says Wiehann Olivier, head of fintech at Forvis Mazars in South Africa.
This isn’t the first piece of homework regulators have handed to the industry. CASPs are already on the hook for reporting to the Financial Intelligence Centre and complying with the Financial Action Task Force (FATF) “travel rule,” which came into effect earlier this year. That rule mandates the collection of sender and receiver data for all crypto transactions over R5,000, ostensibly to combat money laundering and terrorism financing.
CARF simply adds another layer to this regulatory cake, with a specific focus on tax. “CASPs will need to ensure their systems can support both regulatory and tax reporting obligations in parallel,” Olivier adds. “The reputational and financial risks of non-compliance are significant.”
SARS has made it clear that it won’t be messing around. Failure to comply will invite penalties under the Tax Administration Act, a threat that could see non-compliant players either forced out of the market or swallowed up by larger, more compliant rivals.
The Taxpayer’s Reckoning
For the individual crypto enthusiast, the message is even simpler: the taxman knows. The framework will provide SARS with granular, transaction-level data, making the age-old strategies of omission and under-declaration a high-stakes gamble.
“Taxpayers — especially those with significant crypto holdings — must now ensure their records are accurate, complete, and defensible,” warns Olivier. “The days of informal recordkeeping and selective disclosure are over.”
This new reality check comes as SARS is already on the warpath. The revenue service has reportedly sent thousands of letters to taxpayers it suspects of under-reporting crypto gains. For those who have been, shall we say, forgetful, SARS is benevolently offering its Voluntary Disclosure Programme (VDP).
“By doing so, they can avoid severe penalties of up to 200% and potential criminal charges — although interest will still apply,” explains Evádne Bronkhorst, a senior tax manager at Forvis Mazars. It’s a chance to come clean before the automated data-matching begins in earnest.
The scale of the compliance gap is vast. According to estimates from crypto tax software company CoinLedger, South Africa is home to nearly eight million crypto users, yet only about 500,000 are thought to be declaring their related income or capital gains.
The Myth of Anonymity Dies Hard
All of this regulatory scaffolding stands in stark contrast to the early, utopian promise of crypto: a world of anonymous transactions shielded from government oversight. That was, it turns out, a fundamental misunderstanding of the technology.
“Blockchain transactions are not fully anonymous; they are linked to wallet addresses, and with sufficient on- and off-chain data, these addresses can often be tied back to individual taxpayers,” Olivier points out. “Because every transaction is permanently recorded on an immutable public ledger, this creates a powerful tool for revenue authorities such as SARS.”
Jashwin Baijoo, associate director at Tax Consulting SA, puts it bluntly: “Now is not the time to take risks. SARS’s approach clearly shows we are dealing with a competent revenue authority.”
The Bottom Line
The introduction of CARF isn’t just a South African story; it’s the local chapter of a global regulatory tightening. The crypto industry, having spent a decade demanding to be taken seriously as a legitimate asset class, is finally getting its wish. It turns out that legitimacy comes with the same tedious baggage as every other financial instrument: paperwork, compliance, and, of course, taxes.
The buccaneering days are over. For startups in the space, the future isn’t in helping users hide, but in helping them comply. For investors, the long-term winners will be the platforms that can seamlessly integrate these new rules. Crypto is growing up, and like all transitions to adulthood, it involves less talk of revolution and a lot more administration.