South African Reserve Bank Governor Associates Cryptocurrencies with Pyramid Ponzi Schemes
As per an all-new statement released by Lesetja Kganyago (the Governor of South Africa’s Reserve Bank) a few days back, his government has no intentions of recognizing crypto-assets as being legitimate financial instruments anytime soon.
In his opinion, cryptocurrencies are not only volatile but also do not meet the requirements that are fulfilled by regular fiat assets for carrying out an individual’s day-to-day payment related activities. Additionally, he also referred to the crypto market as being “sophisticated Ponzi scheme”.
More On The Matter
Kganyago’s remarks were in direct response to a question posed by a student during the main event of the recently concluded “Nedbank-Old Mutual Budget Speech Competition” that was held in Cape Town.
The student asked the Reserve Bank Governor whether or not he believed cryptocurrencies could have a positive impact on the South African economy— to which the official replied:
“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,”
In addition to this, he also said that in order for an asset to be recognized as a valid currency, it “must become a unit of accounts” as well as meet all of the aforementioned regulatory criteria.
Other Key Data Worth Bearing In Mind
Kganyago has time and again maintained that his anti-crypto opinion is his own and is completely independent of the stance that has been adopted by the Reserve Bank (on the subject).
In this regard, he cited the recent Khokha project as an example of the Reserve Banks’ success within the global digital arena. For those of our readers who may not be aware of the above-mentioned development, the Khokha project was recently awarded the “Best Distributed Ledger Initiative” at last year’s FinTech RegTech Global Awards 2018.
“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.”
In rounding off this piece, it is worth noting that around a month back, a number of financial authorities within South Africa released a crypto-assets based consultation paper that contains a host of guidelines that have been devised in relation to the development of a brand-new crypto industry within the country.
The government entities involved with this operation include:
- The South African Reserve Bank (SARB)
- SA’s National Treasury (NT)
- Financial Sector Conduct Authority (FSCA)
- Financial Intelligence Centre (FIC)
- The South African Revenue Service (SARS)