The South African Reserve Bank (SARB) has announced that it considers cryptocurrencies as ‘cyber-tokens’ and not as currencies. The distinction has been made, according to Bloomberg, because the bank does not believe digital assets meet the requirements of money.
About this, Francois Groepe, Reserve Bank Deputy Governor, explained:
“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’.”
This is not the first time that the SARB makes comments on cryptocurrencies. As we have reported in the past at BitcoinHub, the bank established a fin-tech task team which had to monitor blockchain and virtual currency activities in the country.
“Regulating cryptocurrencies prematurely could have the negative consequence of throttling the growth and innovation of the industry,” explained Bridget King, finance and banking practice director at Cliffe Dekker Hfmeyr. “In addition, if laws are drafted based on existing technology, which is still in its growth phase, there is a risk that the technology may have moved so much by the time the legislation is enacted, that the legislation is obsolete or requires updating almost immediately to align with the latest technology.”
The main intention was to move forward, regulate and control the cryptocurrency market – which is highly unregulated all over the world. The team that has been created will be assisting the SARB so as to create a better regulatory framework that could leverage cryptocurrencies and fin-tech companies.
It seems that the task team has advised the SARB that cryptocurrencies are not currencies, but instead, cyber-tokens. This would help the SARB build public policies around these digital assets and provide with more clarity to the enterprises operating in the country.
South Africa’s neighbouring country Zimbabwe, has been in the news in the last days because its central bank – the Reserve Bank of Zimbabwe (RBZ) – has issued a circular that orders financial institutions to stop providing services to cryptocurrency-related companies.
Additionally, it has ordered Golix, the most important crypto exchange operating in Zimbabwe, to halt its trading operations. The situation arrived at the High Court in Harare which was ready to analyse the situation about this case.
On May the 24th the court decided to lift the ban imposed by the central bank, allowing Golix to keep its operations under the law.
The statement released by the judge reads:
“The ban issued by Respondents through a letter dated 15 May 2018 against Applicant directing it to cease its operations, shut down its virtual currency exchange business and ordering the closure of its bank accounts with its bankers be and is hereby suspended pending the return day.”
It is important to mention that South Africa is not in a similar situation than Zimbabwe, which has suffered one of the highest inflations in the world during the past decade. South Africa is taking very strategic measures and it is shown on how the society is reacting to it.