South African tech business, Nona Creative, has conducted an equity deal entirely in Bitcoin.
Nona Creative, a digital consultancy and product development firm, based in Cape Town, recently took the leap and decided to buy out a significant shareholder, in what could be the first Bitcoin equity transaction in the country, and possibly the world.
“Bitcoin is a frictionless currency that we all firmly believe in.”
Nona CEO, Mike Scott, who has been researching blockchain technology, and investing in cryptocurrencies since 2012, considers blockchain the next major technological evolution, and motivated for the unconventional deal. “We wanted to show that normal business transactions can easily be done through cryptocurrency,” he explains.
He is not alone in his enthusiasm. Nona, as a whole, advocates for the adoption of cryptocurrency, and now includes blockchain consulting and development as part of its service offering, with hopes to lead the way in this space. It was therefore no surprise that the board of directors were largely supportive of the idea, even though there was little evidence that anyone else had attempted this before.
Dotting the i’s and crossing the t’s
However, there was some work to be done in terms of the compliance and legalities of the transaction, especially considering that cryptocurrency is still very much an unregulated currency.
Before taking the leap, Nona approached prominent law firm SchoemanLaw Inc, for a legal opinion. “In South Africa, the Reserve Bank is conducting a regulatory experiment,” explains Nicolene Schoeman-Louw, an Attorney and Managing Director at the firm. “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.” Until the regulatory framework is determined, Schoeman-Louw stresses that businesses and individuals should first seek professional advice on the taxable responsibilities, implications, and obligations before entering into a cryptocurrency transaction.
Nona also sought advice on the issue of tax, contacting Afzal Khan, Tax Director at RAFT Consulting – an association of African national accountants, auditors and consultants. According to Khan, 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,” he states, “However, specific rules may be developed in the future to clarify the duality of crypto financial instruments.” Despite the current lack of tax guidelines, Khan asserts that cryptocurrencies are the future.
Leading the way forward
2017 has been the most successful year, to date, for blockchain and cryptocurrency. Since January, the worth of the world’s largest digital currency, Bitcoin, has gained a staggering 900% in value, with its market cap increasing by over 1000%. While many have described the cryptocurrency trend as a “bubble”, Scott and his counterparts at Nona choose to focus on the underlying blockchain technology, which has virtually limitless real business use cases. “We understand that it’s young, and in most cases, still a solution looking for a problem, but we believe that this is where things are going, and we are going to be at the forefront.”
Scott has expressed that he’s open to discussing blockchain technology, decentralised applications, cryptocurrencies, and this particular transaction with the media, business owners and others who are looking to better understand the space.
