Crypto Fest Diamond Sponsor, Mazars, Provides Audit Services to Industry Leaders in the South African Cryptocurrency Sector

Providing Audit Considerations for the South African Cryptocurrency Sector

By Wiehann Olivier

In 2019, South Africa was ranked as the top country for ownership of cryptocurrency with over 10% of South African internet users owning cryptocurrencies like Bitcoin – the highest per capita in the world! These figures, reported in the Global Digital Report 2019, confirms that South Africa has truly embraced the digital currency revolution.

As more and more South Africans come to the realisation that cryptocurrencies are here to stay, they also tend to wonder how cryptocurrency get its value. According to Wiehann Olivier, CA(SA) and Partner at Mazars in South Africa, the answer is actually quite simple.

“Cryptocurrencies like bitcoin obtain their value through the supply and demand of willing buyers and sellers in an open and informed market unaffected by any pricing regulation or interference from intermediaries,” he explains. Their transparent, fair value is one of the characteristics that make cryptocurrencies such an attractive form of modern money. Furthermore, cryptocurrencies have the added benefit of being transferrable across the world in a matter of minutes. All of this is made possible by the blockchain technology that underpins cryptocurrencies.

“What blockchain technology tries to achieve is to have a decentralised ledger where there is no need for an intermediary such as a bank managing and updating the ledger, but rather that the transactions on the distributed ledger are verified by unrelated individuals by way of a consensus algorithm,” Olivier says.

However, the influx of unregulated capital into transactional and transnational economies has gained traction in the circles of investors, national securities and monetary regulatory agencies.

Since there is currently no jurisdiction that regulates cryptocurrency in South Africa, many local businesses and entrepreneurs that want to operate in a regulated industry have had to venture abroad to set up shop in other regulated countries – consequently pushing away possible investors.

Fortunately, South Africa’s financial authorities recently released the Position Paper on Crypto Assets in April 2020, which aims to create a strong regulatory framework for crypto assets in accordance with the Financial Action Task Force’s anti-money laundering and counter-terrorism funding (AML/CFT) regulations. With these progressions, traditional audit firms will soon also have to adapt in the same way Mazars has in order to serve clients who operate in the cryptocurrency space.

“While there are some who believe that blockchain’s transparency will eliminate the need for an auditor of financial statements, the reality is that blockchain will merely become a tool for the auditor to audit more efficiently and enhance the reliance of the information they are issuing an opinion on,” Olivier says. “The auditor will have to remain agile in ensuring that their audit approach can be adapted to mitigate any possible risks, but also to capitalise on the possible efficiencies the technology might offer.”

While the same reporting standards as outlined in IFRS will apply to the cryptocurrency sector in South Africa, auditors will have to get creative in this ever-changing industry. According to global trends for example, auditors can account for cryptocurrencies as ‘inventory’  or ‘intangible assets’, but some hurdles may arise where auditors are required to obtain assurance over various assertions relating to cryptographic assets recorded on a public blockchain which they need to enable them to issue an audit opinion. “In a situation like this, auditors will need to think outside the box when obtaining the required assurance such as rights and ownership of an asset that is designed to protect the privacy of the owner. This approach of thinking outside of the box requires one to first understand the technology,” Olivier explains.

There’s no certainty on how the cryptocurrency sector will continue to challenge the audit profession in the future, but one thing is for sure – it’s going to be one heck of a ride and Mazars is geared!

While recently appointed as the auditors of both Luno and Revix, Mazars is gaining a strong foothold in the audit of industry leaders in the South African cryptocurrency sector. “Building long-term customer trust in the fast-moving crypto space means you have to work with informed knowledgeable partners,” explains Sean Sanders, the CEO and Founder of Revix. “Just like the dot com boom in the late 1990’s, you have a lot of new terms and ways of doing things and this means that you cannot rely on generalists in any field. We’re grateful to be working with the experts at Mazars as it demonstrates to investors that cryptocurrencies and Revix’s products can be trusted.”

Mazars’ willingness to learn combined with their firm industry expertise has made them eager to pioneer the audit of cryptocurrency businesses across the country.

For information on Mazars’ offerings for cryptocurrency businesses, contact Wiehann Olivier at

Wiehann is also a speaker at the Crypto Fest 2020. Don’t miss his talk on “The Application of Traditional Regulatory Frameworks to that of Cryptocurrencies and Related Businesses“.
Regulations from an audit, accounting, reporting and tax perspective were developed without the presence of cryptocurrencies. The question is how do these unique digital assets and businesses that operate in this sector, fit into these regulations?