Cryptocurrency arbitrage has become an attractive strategy for individuals looking to capitalize on price differences across exchanges. However, in South Africa, arbitrage opportunities are influenced by important financial regulations—specifically SDA (Single Discretionary Allowance) and AIT (Approved Investment Allowance).

If you’re involved in crypto arbitrage or are considering signing up, understanding SDA and AIT is crucial for optimizing your arbitrage strategy while staying compliant with South African regulations.

What is SDA (Single Discretionary Allowance)?

The Single Discretionary Allowance (SDA) is a regulation set by the South African Reserve Bank (SARB) that allows individuals to send up to R1 million per calendar year abroad without requiring special approvals.

This allowance can be used for:

🔹 Travel expenses

🔹Gifts and donations

🔹 Offshore investments

🔹 Foreign exchange transactions (including crypto purchases on international exchanges)

How SDA Affects Crypto Arbitrage

Since crypto arbitrage relies on buying cryptocurrency on international exchanges (where cryptocurrency prices are often lower) and selling it locally in South Africa at a premium, the SDA enables individuals to legally convert R1 million into foreign currency for arbitrage trading.

🔹 Key Benefit: SDA makes it possible for South Africans to participate in arbitrage without applying for special permissions from the SARB.

🔹 Key Limitation: Once the R1 million annual limit is reached, traders must use AIT (or other allowances) to continue.

What is AIT (Approved Investment Allowance)?

The Approved Investment Allowance (AIT) allows South African individuals to invest up to R10 million per year in offshore assets, but it requires additional approvals from the South African Reserve Bank (SARB) and SARS (South African Revenue Service).

To use the AIT, an individual must:

🔹 Obtain a tax clearance certificate from SARS.

🔹 Provide proof that the funds are for investment purposes.

🔹 Adhere to SARB reporting requirements.

How AIT Affects Crypto Arbitrage

For individuals wanting to scale their arbitrage operations beyond the R1 million SDA limit, the AIT provides an additional R10 million per year for international transactions.

🔹 Key Benefit: AIT allows individuals to scale arbitrage significantly beyond personal SDA limits.

🔹 Key Limitation: It requires tax clearance and SARS approval, which involves an application process and stricter regulatory oversight.

Maximizing Arbitrage Profits with SDA and AIT

For individuals engaging in crypto arbitrage, strategically using SDA and AIT can increase profitability while staying compliant with South African regulations.

1. Start with SDA for Easy Access

If you’re new to arbitrage, start with your R1 million SDA since it doesn’t require approval.

Execute multiple smaller trades to maximize profits within your limit.

2. Scale with AIT Once SDA is Used

If you want to go beyond R1 million, apply for AIT approval early to avoid delays.

Ensure that you have a tax clearance certificate from SARS.

3. Use Professional Arbitrage Services

FiveWest provides structured arbitrage solutions for individuals, ensuring efficient fund transfers and regulatory compliance.

Our platform helps you optimize your SDA and AIT usage, making arbitrage smoother and more profitable.

How FiveWest Can Help with Crypto Arbitrage

Looking to scale your crypto arbitrage profits while staying compliant? Get in touch with FiveWest today to learn how we can help you maximize your returns using SDA and AIT.

Begin the arbitrage registration process today.