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Crypto-currencies are not money says the South African Reserve Bank governor

cryptocurrencies Africa zimbabwe

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.


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9 thoughts on “Crypto-currencies are not money says the South African Reserve Bank governor

  1. Bitcoin enthusiasts quote value in USD, yet they tout Bitcoin as escaping that same controlled and manipulated currency. Transitive, it is this also controlled and manipulated. 😂

  2. I agree with the SARB here for the following reasons:

    1. In S.A and in most other countries, cryptos are not money. They are investments. When I worked for Luno, most customers were buying cryptos for investment purposes. Very few customers would enquire on where they could spend their crypto. Actually, there are very few places were you can buy with cryptos in S.A.

    2. I might get called out by crypto enthusiasts here, but why would you allow a vehicle of corruption in an already overly corrupt environment? Not to say cryptos are used for corruption, but they easilly allow criminals to move money accross borders. In this regard, I think cryptos need to be highly regulated in Zim and S.A.

  3. People only quote Bitcoin in its own units after the amount exceeds a high threshold like 1BTC. 10USD for example would be around 0.0002 BTC, it’s obviously easier to just tell someone a USD quoted value. Another thing is cryptos are highly volatile, their values aren’t always the same, 0.0002BTC maybe worth 10USD at the time you tell someone to make a transfer or to process a payment, but could be way less or even higher the moment the payment is made, hence the need for making the quotes in USD.

  4. 3 words speculation speculation speculation…you can’t use bitcoin for payments….just for investing…and that also with yo yoing …no piont

  5. So what is the value of the Rand, Pula, ZimDollar, if you quote it in USD , then…………..”its not a currency”???????
    If you cannot buy anything with cryptos , then why does the SARB need to ban people from actively using them ??????
    These governments from SA, China, etc are just sh*t scared because cryptos provide a simple way for people to move money out of the country (in China externalization of funds is a huge problem) and the powers that be are unable to do anything about it once the money is in your crypto wallet. This is why they come up with all these harsh, shoot from the hip, sometimes contradictory, reactionary policies.
    Believe it or not, people were buying and selling bitcoins even before the likes of Binance and co existed.
    And by the way what the hell is this “Cryptos also fail the unit of account tests.” I am sorry but just because of the way people refer to their crypto holdings is not “a failure of the unit of account test”. One bitcoin is equal to any other bitcoin , its authenticity can be verified, bitcoins are divisible, and countable, you can perform mathematical operations on them, ie subtract , add and multiply, and therefore can also use them to price goods.
    My preference to refer to 0.5 bitcoin as “USD$25 000 of bitcoin” is a choice, its simply my way of expressing something that maybe unfamiliar using terms that are more widely understood.

  6. The disruption caused by crytpo is the same as when the automobile disrupted the horse-wagon industry.The governments then would come up with regulations that clearly showed they did not understand nor appreciate value addition of the automobile. By design Cryptocurrency was never meant to be regulated nor understood by governments, its a decentralized way of living and with advancements in use case of DeFi and other blockchain innovations, governments will have no choice but to pave way for disruption.

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