The governor of the South African Reserve Bank (SARB), Lesetja Kganyago, has reiterated the central bank’s longstanding belief that cryptocurrencies like bitcoin are not currencies. According to Kganyago, crypto-assets, as he prefers to call them, are not currencies because they fail to meet the standard of what constitutes a currency.
Crypto and the Currency Test
In recent remarks to Mills Soko, a professor at a South African university, Kganyago asserts cryptocurrencies like bitcoin only partially meet one of the three key characteristics of a currency. Kganyago explained:
One, it must be a generally accepted medium of exchange. Secondly, it must be accepted as a store of value. And thirdly, it must be a unit of account. A cryptocurrency is a store of value. It is a medium of exchange but is not generally accepted. It’s only accepted by those who are participating in it.
However, despite adopting this stance toward cryptocurrencies, the SARB governor insists the central bank must still regulate these assets because “people go and invest in cryptos and when they lose money, they ask what government has done about it.”
Blockchain Technology Useful
Predictably, Kganyago, just like many of his peers, praises blockchain technology saying it “can be useful in many other respects.” The governor also reiterates that SARB, just like central banks around the world, is experimenting with blockchain technology.
When asked if the SARB plans to regulate fintech firms in the same way banks are regulated, Kganyago argued that if the activities of such companies start to resemble those of regulated entities, the central bank will have no option but to regulate. He said:
So, if you are a fintech firm, and you take deposits, we will regulate you like a deposit taker. If you are a fintech firm, and you do money transmission, we will regulate you like a payments provider. If you are a fintech firm, and you sell insurance policies, we will regulate you like an insurer.
Still, Kganyago claims that the SARB understands “the value that the fintech firms bring to the financial sector.” According to him, it is for this reason that the central bank has “created an innovation hub at the Reserve Bank.”
Do you agree with what Kganyago has said about cryptocurrencies? Tell us what you think in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Felix Lipov
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The governor of the South African Reserve Financial institution (SARB), Lesetja Kganyago, has reiterated the central financial institution’s longstanding perception that cryptocurrencies like bitcoin are usually not currencies. In line with Kganyago, crypto-assets, as he prefers to name them, are usually not currencies as a result of they fail to satisfy the usual of what constitutes a foreign money.
Crypto and the Forex Check
In current remarks to Mills Soko, a professor at a South African college, Kganyago asserts cryptocurrencies like bitcoin solely partially meet one of many three key traits of a foreign money. Kganyago defined:
One, it should be a typically accepted medium of alternate. Secondly, it should be accepted as a retailer of worth. And thirdly, it should be a unit of account. A cryptocurrency is a retailer of worth. It’s a medium of alternate however will not be typically accepted. It’s solely accepted by those that are collaborating in it.
Nonetheless, regardless of adopting this stance towards cryptocurrencies, the SARB governor insists the central financial institution should nonetheless regulate these belongings as a result of “individuals go and spend money on cryptos and once they lose cash, they ask what authorities has accomplished about it.”
Blockchain Know-how Helpful
Predictably, Kganyago, identical to a lot of his friends, praises blockchain expertise saying it “may be helpful in lots of different respects.” The governor additionally reiterates that SARB, identical to central banks all over the world, is experimenting with blockchain expertise.
When requested if the SARB plans to control fintech companies in the identical means banks are regulated, Kganyago argued that if the actions of such firms begin to resemble these of regulated entities, the central financial institution may have no possibility however to control. He mentioned:
So, in case you are a fintech agency, and you are taking deposits, we are going to regulate you want a deposit taker. In case you are a fintech agency, and also you do cash transmission, we are going to regulate you want a funds supplier. In case you are a fintech agency, and also you promote insurance coverage insurance policies, we are going to regulate you want an insurer.
Nonetheless, Kganyago claims that the SARB understands “the worth that the fintech companies convey to the monetary sector.” In line with him, it is because of this that the central financial institution has “created an innovation hub on the Reserve Financial institution.”
Do you agree with what Kganyago has mentioned about cryptocurrencies? Inform us what you suppose within the feedback part under.
Picture Credit: Shutterstock, Pixabay, Wiki Commons, Felix Lipov
Disclaimer: This text is for informational functions solely. It isn’t a direct provide or solicitation of a proposal to purchase or promote, or a advice or endorsement of any merchandise, companies, or firms. Bitcoin.com doesn’t present funding, tax, authorized, or accounting recommendation. Neither the corporate nor the creator is accountable, immediately or not directly, for any injury or loss brought on or alleged to be brought on by or in reference to using or reliance on any content material, items or companies talked about on this article.
