The popularity of cryptocurrency is snowballing in Africa as there is an increasing number of people using bitcoin and Ethereum being the favorites, Cryptocurrency is getting embraced by many Countries in the continent as they keep discovering the many advantages of Blockchain technology. However, this adoption hasn’t been total in South Africa as the central bank recently referred to Cryptocurrency like bitcoin as “cyber tokens,” pointing out that cryptocurrency coins do not meet the standards to be classified as money.
The Deputy Governor of South African Reserve bank, Mr. Francois Groepe announced that
“We don’t use the term ‘cryptocurrency’ because it doesn’t meet the requirements of money in the economic sense of the stable means of exchange, a unit of measure and a stable unit of value. We prefer to use the word ‘cyber-token” “We want to ensure or establish whether there is still compliance with the relevant financial surveillance or exchange-control regulations.”
The uncertainty of regulatory framework has continuously proven to be a significant challenge to digital currencies, in an attempt to draw up a suitable policy framework, the central bank introduced a financial technology named Fintech. Fintech also helps the banking sector to review its stand and position on private cryptocurrencies. The practice director of the central bank, Bridget King, believes that digital currencies aren’t suited to traditional centralized regulation which is afforded to the financial and banking sectors. Bridget said that “Self-regulation through self-regulatory organizations (SRO) may be a more likely solution for the regulation of cryptocurrencies.”
South Africa is one of the few countries whose Central bank would openly discredit Cryptocurrency. The high court of Zimbabwe recently lifted a ban that was earlier placed by the reserve bank of the country, this ban prohibited financial institutions from rendering services to all cryptocurrency exchanges. A similar case was reported in India, with the country’s reserve bank giving a directive restraining their banks from involving in all cryptocurrency related operations. The deputy governor of Indian Reserve bank, BP kanungo said that
“We have decided to ring-fence the RBI regulated entities from the risk of dealing with entities associated with virtual currencies. They are required to stop having a business relationship with the entities dealing with virtual currencies forthwith and unwind the existing relationship within a period of three months.”
However, some financial institution filed a petition against the Central bank in the court, and there is forthcoming hearing in July 2018. The outcome of this court proceedings will have a significant consequence on economic activities in the country in the nearest future.