A Cape Town-based technology business has conducted an equity deal entirely in bitcoin.
Nona Creative, a digital consultancy and product development firm, recently bought out a significant shareholder in what may be the first ever bitcoin equity transaction in the country.
Motivating the unconventional deal was Nona Creative CEO, Mike Scott, who has been researching blockchain technology and investing in cryptocurrencies since 2012.
“We firmly believe in Bitcoin and wanted to show just how effortless it is to conduct normal business transactions using cryptocurrency,” explains Nano Creative CEO Mike Scott. He believes that blockchain is “the next major technological evolution”.
Taking into account that cryptocurrency is still an unregulated currency, Nona Creative called on law firm, SchoemanLaw, for guidance in terms of the compliance and legalities of the transaction.
Attorney and SchoemanLaw MD Nicolene Schoeman-Louw explains that – in South Africa – the Reserve Bank is conducting a regulatory experiment. “It is no longer a question of whether such currencies, including bitcoin, should be regulated or not, but rather who will be doing the regulating,” she says.
Until this regulatory framework has been determined, Schoeman-Louw stresses that those interested in conducting business transactions using such currencies should first seek professional advice on the taxable responsibilities, implications, and obligations.
Nona Creative also consulted Afzal Khan, the tax partner at RAFT, for insights into the tax considerations associated with the transaction.
According to Khan: “Cryptocurrencies are the future. Current tax principles may be incorrectly applied where tax advisors do not adequately understand the underlying factual transaction flows for crypto.
“The principles for taxation of ecommerce transactions and financial instruments are clear. However, specific rules may be developed in future to clarify the duality of crypto financial instruments,” he explains.
Scott adds that 2017 has been the most successful year for blockchain and cryptocurrencies to date.
“Since January, the value of the world’s largest digital currency, bitcoin, has increased by a staggering 900%, with its market cap increasing by over 1 000%.”
While many believe the cryptocurrency trend is a “bubble”, Scott and the team at Nona Creative are focusing on the underlying blockchain technology and its use in business.
“We understand that cryptocurrency is still in its early stages and, in some cases, is still a solution looking for a problem,” he says. “However, we believe that this is where things are going and we are ready to lead in this space.”