Today there was an announcement with regard to a crypto collaboration between Money badger and Scan To Pay that enables people with crypto to spend directly at 680 000 retailers in South Africa. On the surface this sounds great, but I do have some serious concerns and why I will remain in the shadows and not be tempted.
These apps allow you to send crypto into their wallets and by tapping the QR code it will convert whatever crypto you have directly into Rands. This is very convenient and I am sure many who have crypto will use this service.
I have never heard of Money badger of Scan To Pay before and there would have to be some form of KYC involved so your details will be recorded. This collaboration will allow the South African reserve Bank to gather more information on who is involved in crypto and from which exchanges the crypto is coming from.
The initial offering by these two payment apps is those that spend with USDT will receive a 10% cash back on their purchases. The merchant pays for the fee which is roughly 2.5% and if they do larger sales volumes there is a discount after R100K.
This sounds like a very good way to use your crypto for every day living, but you are also opening yourself up showing to the authorities who you are and what crypto you are spending. If you are legit and have declared your crypto in your tax returns then there are no worries or come backs.
We already know that the SARS is monitoring Luno and has been working on giving Binance a license so these are two exchanges that are waving red flags. In my opinion using these two apps will provide far more information for the receiver than those two exchanges.
One has to understand that crypto challenges the current payment systems and those South African systems were set up in 1961. These systems were put in place to control off shore trusts and cheque book spending and not borderless digital payments. The South African revenue Services does not have the resources and capabilities to monitor crypto around the world so opening up retail payments would give them a starting point to gather data.
When you consider SA has a R50 billion tax budget hole to fill they are going to be looking everywhere and crypto will be in the spot light when we see the alt coin season and peak of this crypto cycle. I would assume the majority have not declared their crypto holdings as why would you if you have not sold and were accumulating.
My worry is how many people would sign up to these two apps not thinking that this will create a crypto trail leading back to your stash. The purchasing of groceries or paying for a meal in a restaurant could be so tempting knowing you are receiving a 10% cash back whilst at the same time adding your data that was never known before.
My crypto stake is going to remain out of the spot light and why I have taken the time and effort to find a safe off ramp for the future. Regulation around crypto taxes will not be so easy to dodge and if it was 10 or 15% that would not be a problem, but when it is at 40 or 45% finding another route is the only choice.