Economic

South Africa releases draft crypto tax guide

The South African Revenue Service has released draft guidance on how crypto assets should be taxed under existing income tax and capital gains tax rules.

The Draft Guide to the Taxation of Crypto Assets is open for public comment until 31 August 2026. It provides guidance on tax consequences that may arise when taxpayers hold or transact in crypto assets.

SARS treats crypto assets as intangible assets rather than currency. The draft guide says taxpayers must apply normal tax rules to determine whether amounts received or accrued from crypto transactions are revenue or capital in nature.

Tax treatment will depend on the facts of each case, including the taxpayer’s intention, the nature of the transaction and whether the asset is held as trading stock or on capital account.

The guide covers activities such as selling crypto assets for fiat currency, swapping one crypto asset for another, using crypto assets to pay for goods or services, mining, staking, decentralised finance, airdrops and hard forks.

The draft also notes that South Africa has implemented the Crypto-Asset Reporting Framework, requiring reporting crypto-asset service providers to collect and report transaction data to SARS.

SARS said the guide is foundational and not a binding general ruling, meaning taxpayers should still consider the specific characteristics of each crypto asset and transaction.

Why does it matter?

The draft guide gives taxpayers and crypto service providers clearer expectations on how South Africa’s existing tax system applies to digital assets. Treating crypto as intangible property rather than currency means trading, staking, mining, swaps and payments can create income tax or capital gains tax consequences depending on the circumstances. CARF reporting also increases tax authority visibility over crypto transactions, moving enforcement towards data-driven oversight and making non-disclosure harder.

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UK finalises crypto regime with lower stablecoin capital coefficient

The UK Financial Conduct Authority has finalised key parts of its new cryptoasset regime, which will bring a broad range of crypto firms into full FCA authorisation from 25 October 2027.

The regime will apply to firms carrying out regulated cryptoasset activities, including trading platforms, intermediaries, custodians, stablecoin issuers and firms arranging staking.

As part of the package, the FCA has reduced the stablecoin issuance capital requirement coefficient from 2% to 1%. The regulator said the change makes the prudential framework more proportionate for larger issuers while maintaining the robustness of the overall regime.

The FCA said the new framework moves the UK beyond the anti-money laundering and financial promotions standards that previously defined its role in crypto markets.

The policy package includes final rules and guidance on stablecoin issuance, regulated cryptoasset activities, admissions and disclosures, market abuse, prudential requirements and the application of the FCA Handbook.

Under the stablecoin rules, non-systemic UK-issued qualifying stablecoins will be subject to requirements covering issuance, backing assets, redemption, safeguarding and disclosures.

Firms will be able to apply for authorisation between 30 September 2026 and 28 February 2027, ahead of the mandatory regime taking effect in October 2027.

Why does it matter?

The FCA’s policy package marks a major shift from limited crypto oversight towards a full authorisation-based regime. For stablecoin issuers, the reduction of the K-SII coefficient from 2% to 1% shows the regulator responding to industry concerns about proportionality and competitiveness while keeping baseline prudential safeguards. The wider regime could give firms clearer rules for operating in the UK, but it will also raise compliance expectations for platforms, custodians, intermediaries and staking providers.

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Singapore proposes governance framework for AI agents in finance

The Monetary Authority of Singapore (MAS) has published an industry white paper proposing a governance framework for AI agents operating in financial services. The framework was developed in collaboration with leading financial institutions and fintech companies.

Titled Safeguards for Agentic Finance at Runtime (SAFR), the framework aims to ensure AI agents carrying out financial tasks autonomously operate safely, securely and reliably within mandates, policies and risk limits defined by financial institutions.

SAFR addresses a central challenge of agentic AI in finance: autonomous systems increasingly operate at a speed and scale that make real-time human intervention impractical. It introduces governance checkpoints that verify and record an AI agent’s proposed actions before execution, incorporating policy-bound execution, real-time validation, auditability and interoperability directly into operational workflows.

Industry participants have already applied the framework to several use cases, including AI agents executing routine payments and treasury transactions within predefined limits, reviewing documents and generating compliance assessments for wealth management, and drafting client communications within approved content boundaries.

MAS has invited industry partners to join its BuildFin.ai working group to help shape future versions of SAFR. The recently established Future of Finance Institute will support adoption through industry pilots and regulatory sandbox experiments, with expressions of interest open to institutions wishing to test SAFR-aligned solutions.

Why does it matter?

As AI agents begin executing transactions, assessing compliance and interacting directly with customers, financial institutions need governance mechanisms that operate at machine speed rather than relying solely on human oversight. SAFR represents one of the first practical frameworks designed to embed policy checks, validation and auditability into AI-driven financial processes before actions are carried out.

The framework also reflects Singapore’s collaborative approach to financial innovation. By developing governance standards jointly with banks and fintech companies, MAS is seeking to create safeguards that are both technically practical and easier for the industry to adopt, potentially providing a model for other financial regulators exploring agentic AI.

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Bank of England explores AI ‘kill switches’ for markets

The Bank of England is exploring whether emergency ‘kill switches’ could halt trading activity if autonomous AI systems begin behaving unpredictably, reflecting growing concern that existing market safeguards may not be suited to AI-driven trading.

Deputy Governor Sarah Breeden said regulatory frameworks must evolve as AI systems become capable of autonomously chaining actions and executing trading strategies. Speaking at the European Central Bank’s Sintra Forum, she warned that relying solely on human oversight may no longer be sufficient as financial markets become increasingly automated.

Regulators are particularly concerned about systemic risks, including AI models amplifying market volatility, exhibiting coordinated behaviour or pursuing objectives that diverge from their intended design. They also warned that AI could strengthen cyber defences while simultaneously making it easier to discover and exploit vulnerabilities at scale.

Breeden said the Bank is also exploring resilience measures such as simulation testing, stronger recovery mechanisms and potential cross-institution support during market disruptions. She added that international coordination will be essential as increasingly autonomous AI systems become embedded in global financial markets.

Why does it matter? 

The Bank of England’s proposals reflect a growing recognition that autonomous AI systems could introduce systemic risks that existing market safeguards were not designed to address. Traditional mechanisms such as circuit breakers assume markets are ultimately driven by human decisions, whereas AI agents may react to changing conditions at machine speed and in highly coordinated ways.

The discussion also illustrates how financial regulators are shifting from studying AI risks to preparing practical resilience measures. Tools such as simulation testing, emergency trading controls and international coordination could become increasingly important as AI takes on a larger role in trading, payments and other core financial market functions.

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EU examines harmful design features in online platforms

The second annual report on systemic risks under the Digital Services Act has highlighted online risks faced by children and young people on very large online platforms and search engines.

The report was published by the Board for Digital Services and developed in cooperation with the European Commission. It provides an overview of recurrent systemic risks in the EU for very large online platforms and search engines.

Risks identified in the report include the spread of illegal content, cyberbullying, grooming and exposure to harmful material such as dangerous viral challenges and adult content.

The report also points to the role of platform design. Interface features and recommender systems can contribute to addiction-like behaviour, increase exposure to harmful content and intensify harmful interactions between users.

Platforms have introduced mitigation measures, including targeted protection tools, content moderation systems and user empowerment features.

The Commission said the report reinforces the role of the DSA as a transparency and accountability tool for understanding how online platforms function and shape risks in society.

The findings will support regulators, civil society, and platforms as the EU continues to monitor DSA implementation and efforts to create a safer online environment for minors.

Why does it matter?

The report shows that the EU platform regulation is moving beyond illegal-content takedown towards a broader assessment of systemic risks created by platform design. For children and young people, recommender systems, interface choices and engagement-driven features can shape exposure to harmful content and unsafe interactions at scale. The DSA reporting process, therefore, provides regulators and civil society with a clearer evidence base for assessing whether very large platforms are doing enough to protect minors.

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Pax Silica expands with new AI partnership, supply chain initiatives, and workforce programme

The United States has announced a series of new initiatives under the Pax Silica partnership aimed at strengthening AI supply chain security, expanding international cooperation on AI, and supporting advanced manufacturing capabilities among participating economies.

The announcements were made following the 2026 Pax Silica Summit, the second meeting of the initiative launched by the US Department of State in December 2025. Pax Silica focuses on strengthening economic security and resilient supply chains across sectors, including semiconductors, critical minerals, advanced manufacturing, energy inputs, AI, and digital infrastructure, through cooperation among participating countries.

One of the summit’s principal outcomes was the signing of a Joint Statement on AI Opportunity by the United States and nearly three dozen partner economies. According to the US Department of State, the statement promotes a pro-innovation and pro-growth approach to AI governance while emphasising secure AI supply chains and support for startups, developers, and private-sector innovation. Signatories include countries from Europe, the Indo-Pacific, the Middle East, and Latin America, including Australia, Germany, India, Japan, the Republic of Korea, Singapore, the United Kingdom, and the United States.

The summit also expanded the Pax Silica partnership itself. Ten additional participants, including Argentina, Chile, Costa Rica, El Salvador, the European Union, Germany, Greece, Kazakhstan, the Netherlands, and Panama, joined the initiative, bringing the total number of signatories to 24. Taiwan continues to support the initiative’s principles through a separate joint statement on economic security cooperation with the United States.

Another announcement focused on strengthening the security and transparency of AI supply chains. The US Department of State plans to launch a competitive funding programme for a pilot AI Assistance Project in Panama to develop an AI supply chain credentialing and provenance platform. According to the Department, the proposed platform would integrate with customs authorities, ports, and logistics systems to help verify and facilitate shipments of semiconductors, AI infrastructure, critical minerals, and other strategic goods. If successfully implemented in Panama, the project could later be expanded to additional Pax Silica partners.

The summit also introduced Foundry School, a workforce development initiative established jointly by the US Department of State and Stanford University. The programme will begin with seminars at Stanford for entrepreneurs and industrial leaders and will be complemented by an advanced manufacturing curriculum that participating educational institutions across Pax Silica economies will be able to adopt. The initiative aims to strengthen expertise in advanced manufacturing, recognising its growing importance for both economic competitiveness and technological development.

Pax Silica reflects broader government efforts to strengthen resilience across AI-related supply chains as geopolitical competition increasingly intersects with technological development. In recent years, countries have introduced a range of policies covering semiconductor production, critical minerals, export controls, and trusted technology partnerships, while also seeking to balance innovation with economic and national security considerations.

The summit’s outcomes indicate that Pax Silica is evolving beyond a policy dialogue into a broader cooperation framework encompassing AI governance, supply chain security, industrial capacity, and workforce development. Whether the initiatives announced at the summit expand beyond their initial pilot phase will depend on implementation by participating governments and continued international cooperation among partner economies.

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FTC seeks comment on AI accuracy policy for model outputs

The US Federal Trade Commission (FTC) is seeking public comment on a proposed policy statement examining whether AI companies may violate consumer protection law by manipulating model outputs in ways that conflict with users’ expectations of objectivity and accuracy.

The proposed statement says AI companies could violate Section 5 of the FTC Act if they deliberately distort AI outputs to pursue undisclosed ideological objectives while marketing their systems as accurate, objective or suitable for specific purposes. Section 5 prohibits unfair or deceptive business practices.

The FTC also questions whether certain state AI laws, specifically Colorado’s Artificial Intelligence Act, could be preempted if they conflict with a federal regulatory framework. According to the Commission, state requirements that compel changes to AI outputs may be incompatible with federal policy.

The proposal follows a December executive order issued by President Donald Trump directing the FTC to examine the legal implications of state laws requiring changes to what the order described as the ‘truthful outputs of AI models.’

The proposed policy statement will be published in the Federal Register, with public comments accepted until 31 July 2026. The Commission approved the notice in a 2–0 vote.

Why does it matter?

The proposal reframes AI output accuracy as a consumer protection issue rather than solely a question of content moderation or AI governance. If adopted, it could expose companies to regulatory scrutiny when they market AI systems as objective or reliable while modifying outputs in ways users are not informed about.

The consultation also highlights growing tension between federal and state approaches to AI regulation in the United States. By questioning whether state laws could be overridden by a federal framework, the FTC is signalling that AI governance may increasingly become the subject of broader legal and constitutional debates over regulatory authority.

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India marks 11 years of Digital India initiative

India has marked the 11th anniversary of the Digital India initiative, with Prime Minister Narendra Modi highlighting its role in transforming governance, public service delivery and access to digital services.

In a statement issued by the Prime Minister’s Office, Modi said the Digital India initiative had made governance more transparent, efficient and citizen-centric. He highlighted digital payments, Direct Benefit Transfers and the expansion of digital public infrastructure as key examples of technology improving public service delivery.

The government also linked the Digital India initiative to broader innovation across the country, including in villages and Tier-2 and Tier-3 cities. Modi said entrepreneurs, startups and innovators were developing technology-based solutions for sectors including education, healthcare, agriculture, commerce and public services.

The statement also highlighted India’s ambitions in emerging technologies. Modi said advances in AI, semiconductors and quantum computing would create new opportunities for economic growth, while reaffirming the government’s commitment to using technology to empower citizens and support sustainable development.

Why does it matter?

The anniversary highlights how Digital India has evolved from a digital government programme into a broader strategy for economic development and technological innovation. By linking digital public infrastructure with AI, semiconductors and quantum computing, the government is positioning digital transformation as a foundation for India’s long-term competitiveness.

The initiative also illustrates the growing role of digital public infrastructure in national development. India’s experience with digital payments, identity systems and public services is increasingly influencing international discussions on digital governance and technology-enabled public service delivery.

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EU introduces €3 duty on low-value e-commerce imports

From 1 July 2026, the European Commission is introducing a temporary €3 customs duty on low-value goods imported into the EU from outside the bloc, primarily through e-commerce platforms. The duty applies to a wide range of commonly purchased goods including clothing, toys, and electronics, covering items worth up to €150.

The duty is charged per customs tariff classification rather than by quantity. For example, purchasing five T-shirts attracts a single €3 charge because they share the same tariff code, whereas buying three T-shirts and a watch incurs two €3 charges because they fall under different classifications. Sellers or importers will declare and pay the duty through the customs process.

The measure is intended to create fairer competition for the EU businesses, improve consumer protection by strengthening oversight of imported goods, reduce customs fraud linked to undervaluation and false declarations, and address the environmental impact of growing volumes of low-value shipments.

The European Commission said the measure forms part of a broader customs reform package aimed at modernising border procedures, strengthening the single market and ensuring that businesses selling into the EU comply with the bloc’s safety and regulatory standards. The duty is described as a temporary measure.

Why does it matter?

The new customs duty reflects the EU’s broader effort to adapt its customs system to the rapid growth of cross-border e-commerce. By introducing a flat charge on low-value imports, the Commission aims to reduce incentives for undervaluation, improve enforcement of product safety rules and create more equal competitive conditions for businesses operating within the single market.

The measure could also influence the business models of major online retailers and marketplaces that rely on high volumes of low-cost imports. Whether the duty succeeds in improving compliance without significantly increasing costs for consumers or slowing legitimate trade will help shape future reforms of the EU’s customs framework.

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UAE and US deepen AI partnership under Pax Silica framework

The United Arab Emirates is expanding its AI cooperation with the United States, describing the partnership as a long-term strategic framework centred on investment, trusted technology and joint innovation across multiple sectors.

The UAE is investing across the US AI ecosystem, including semiconductors, AI applications, energy and digital infrastructure. Officials said the partnership reflects years of institutional cooperation, reinforced through continued policy alignment, economic collaboration and high-level engagement.

At the second Pax Silica Summit in Washington, UAE representatives joined international partners in advancing the Joint Statement on AI Opportunity, with 35 countries reaffirming their commitment to innovation-driven policies, private-sector research and resilient technology supply chains. The UAE joined the Pax Silica initiative in January 2026 as part of a broader US$1.4 trillion economic and technology framework.

The partnership also includes major infrastructure and investment projects, including advanced US semiconductor exports to the UAE, a joint AI campus in Abu Dhabi and expanding data centre capacity. Officials said cooperation will continue to deepen through long-term investment, research and technology integration.

Why does it matter?

The partnership illustrates how AI is increasingly shaping strategic relationships between countries, extending beyond research cooperation into semiconductors, computing infrastructure, investment and supply chains. Governments are treating AI capabilities as a foundation of long-term economic competitiveness and technological influence.

It also reflects the growing importance of trusted international technology partnerships. As countries seek secure access to advanced chips, data centres and AI infrastructure, collaborations such as the UAE-US partnership are becoming an important part of broader industrial, economic and geopolitical strategies.

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