Even though cryptos are now widely accepted throughout the world including on our beloved African continent-authorities are still struggling with how they should handle them. Even here in Zimbabwe, the RBZ is always flip-flopping, when it comes to regulating or even recognising them. They essentially regulated exchanges out of existence when they forbade banks from dealing with them but have also flirted with the idea of Sandboxes.
The confusion is everywhere be it in China where the authorities regularly alternate between averting their eyes and unleashing brutal crackdowns that have global reverberations. In Nigeria Central Bank Nigeria banned crypto but they said they didn’t. In Kenya, the authorities have been similarly hot and cold.
The most advanced nation on the continent should normally provide a lead but even they seem unsure on how to handle cryptos too. In fact, sometimes it’s not even clear who should be in charge of managing the crypto space. In the current vacuum, the South African Reserve Bank has stepped up with various measures. They have for example forbidden South Africans from buying/selling Bitcoin and other cryptos abroad.
In a strange twist though, the current governor of the South African Reserve Bank Lesetja Kganyago, recently revealed that the bank does not think of crypt-currency as a currency. Rather he is of the view that they should be viewed as “crypt-assets”. This is because, in his view, cryptos like Bitcoin do not meet the essential three criteria for a currency:
- They are not generally accepted as a medium of exchange by the wider public. Despite their widespread usage as a lot of people outside the tech-circles do not accept them as a currency.
- People do not view them as a store of value. Again some people accept them as a way of storing value but it’s a limited, though growing, circle of people.
- Cryptos also fail the unit of account tests. In fact this is their biggest failing in my view which makes me want to agree with the governor here. You see more often than not when crypto is sold it is qouted in USD or another currency rather than using it’s own internal unit. For example people tell you they selling or looking for $1000 worth of Bitcoin rather than the exact units of Bitcoin they are looking for.
Despite not thinking of cryptos as a currency the South African Reserve Bank seems keen to regulate the sector. As noted above they have already made it all but impossible for South Africans to buy crypto-currency on platforms such as Binance. Banks like FNB and Absa quietly blocked their Visa and MasterCards from performing such transactions.
The bank has also made it clear that transferring your crypto to an offshore holding is a criminal offence. This means that if you are South African you are technically not allowed to buy (import) stuff abroad and pay using crypto-currencies. The SARB would rather you convert your crypto to Rands then use the existing formal exchange controls mechanism they can monitor to perform such transactions.
This runs counter to the very liberal nature of cryptos which were made to break these chains and transcend the existing political boundaries.