Nona Creative first South African firm to use Bitcoin for acquisition
South Africa has seen its first ever equity transaction conducted entirely through cryptocurrency. Cape-Town-based Nona Creative has acquired a significant shareholder using Bitcoin, after having cleared the legalities of the transaction with tax experts as well as law firm SchoemanLaw.
Globally, cryptocurrency is all the rage at the moment, with Bitcoin values soaring to unprecedented levels in recent weeks. Bitcoin, which is the most prominent of cryptocurrencies, was established in 2010 at a value of less than $0.003 per coin. Over the last few months, the value of the currency has absolutely skyrocketed, surpassing the $15,000 mark this week, and staggering predictions abound that it will reach the $150,000 mark by the end of next year.
With the currency captivating minds in the financial world, it was only a matter of time before it entered the mainstream of major business transactions. South Africa has now witnessed its first occurrence, as digital consultancy and product development firm Nona Creative has acquired a significant shareholder using Bitcoin.
Nona creative is a digital-based consulting firm, which supports clients across the world with web design. The objectives of the firm are to develop and improve user experience, through app-based solutions using angular and ionic frameworks, development of mobile sites, graphic design, product design, strategy, marketing, and a range of other solutions in the digital realm.
The transaction required extra control measures, primarily due to the fact that Bitcoin remains in the unregulated domain. For the taxation aspects, the firm consulted Afzhal Khan, a tax partner at a pan-African association of accountants.
Afzhal said, “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.”
In addition, the lack of regulation also makes ambiguous the legality of the whole transaction. In order to tackle this aspect, Nona Creative turned to law firm SchoemanLaw, a boutique legal services firm based in Cape Town. Managing Director at SchoemanLaw, Nicolene Schoeman-Louw said, “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.”
Nevertheless, the currency remains outside of the regulated domain for the moment, and its growing popularity, combined with this entry into the world of business transactions, is likely to generate widespread demand for consulting services in the country. South African companies are already scrambling to restructure due to the GDPR’s footprint in the country, and this new wave of demand will give impetus to the already substantial business advisory market in the country, currently valued at R70 billion.
CEO of Nona Creative, Mike Scott said, “We firmly believe in Bitcoin and wanted to show just how effortless it is to conduct normal business transactions using cryptocurrency. We understand that cryptocurrency is still in its early stages and, in some cases, is still a solution looking for a problem. However, we believe that this is where things are going and we are ready to lead in this space.”
