South African Reserve Bank (SARB) continues to stick to its long-prevailing crypto perspective as the bank’s Governor has reiterated that SARB does not consider Bitcoin or any of its kind as “currency”. At best cryptocurrencies can be treated as “crypto-assets” and there is nothing less or above that, said Governor Lesetja Kganyago. He opines that a fiat currency of any country meets certain standards on the basis of which the currency is regarded as “currency”, however, none of the standards are there in cryptocurrencies.
SARB’s Governor Lesetja Kganyago was engaged in a conversation with Prof. Mills Soko of a local university. During the conversation, Kganyago commented that any currency of any country is made up of three essential ingredients. If all the three ingredients are there, only then a currency is regarded as a “currency” otherwise its nothing but waste paper. He suggested that however that in the case of crypto, the so-called cryptocurrencies are lacking these essential ingredients. This is why Bitcoin or any of its kind, cannot be regarded as “currency” at all. The best word to define crypto according to his viewpoint is “crypto-assets” and nothing more than that, he claimed.
The Governor then went on to explain the three essential ingredients that are comprised in a “currency”. Firstly, he claims that a currency is such which is accepted as a medium of exchange. Secondly, a currency is such in which value can be stored like a store of value. Lastly, a currency usually represents a unit of account. However, in the case of Bitcoin, there is apparently one ingredient available i.e. the store of value. Though Bitcoin is sometimes used as a medium of exchange it is not approved and acknowledged generally. Only those who approve or acknowledge Bitcoin which are part of it.
However, despite the Governor’s non-acceptance of crypto being a “currency”, he firmly believes that crypto should be regulated in letter and spirit. He is of the view that people in South African as well as in the world have developed a fondness towards crypto. They want to invest their money into them and nobody can take them right away from them. However, it is the responsibility of the Governmental authorities to make sure that the public interests and their money is safeguarded. So for the sole objective of providing security to the investors, regulations should be brought in on an urgent basis.
Kganyago says that when crypto investors are defrauded, they start criticizing the authorities saying what has been done by the authorities. Some even come before the authorities for the redressal of their grievances. But since the crypto market is decentralized currently, therefore, the authorities cannot assist them in any way. However, he agrees that blockchain technology is a new thing with great benefits and should be adopted. He reiterated that SARB is also exploring this technology for the purposes of deriving benefits from it.