The South African Reserve Bank has no plans to recognize cryptocurrencies such as Bitcoin, in the near future.
As far as cryptocurrencies are concerned, Reserve Bank Governor Lesetja Kganyago expressed that cryptocurrencies do not meet any requirements of a regular currency and named it as a sophisticated pyramid scheme.
Such Governor’s opinion was the response to a question from an economics student during the finals of the Nedbank-Old Mutual Budget Speech competition in Cape Town.
The student had asked if evolving financial technologies, including cryptocurrencies, will have an impact on future economics.
“There’s no such thing as a cryptocurrency. A currency must meet the following criteria, it must be recognized as a store of value, it must be accepted as a medium of change and these crypto things are not. They are only valid amongst the people who think they are clever, that they have got a head start in a convoluted sophisticated pyramid scheme,”
South African economist and the central banker said, and explained that “to become a currency, they must become a unit of accounts and it must meet all three. You can’t pick the one you like.”
Kganyago has also confirmed that his position on cryptocurrencies does not infer that the Reserve Bank was against digital transformation and cited the Khokha project as an example of the Reserve Banks success in digital. For the record, Khokha project won the Central Banking FinTech RegTech Global Awards 2018 as “Best Distributed Ledger Initiative”. Governor has indicated that:
“The day a fintech company or Bitcoin compiles with its annual statements, maybe it can become, but for now it’s not a currency. With project Khokha, we were able to settle the total wholesale transaction that would have taken the whole day to settle but we were able to settle it in 45 minutes and what that taught us, there was potential for the technology.”
Aims to Create an All-inclusive Crypto Regulation Law
On January 15, 2019, the South African Reserve Bank (SARB), National Treasury (NT), Financial Sector Conduct Authority (FSCA), Financial Intelligence Centre (FIC), and the South African Revenue Service (SARS) released a crypto assets consultation paper.
The document comprising of recommended regulatory guidelines designed for the crypto-asset industry. Even though the regulation is not yet official, it is a gigantic step in the South African Reserve Bank formulating their position and giving South Africans clear guidelines on how to engage within the crypto sphere.