South Africa’s central bank chooses to call digital currencies such as Bitcoin “cyber-tokens” because they don’t meet the requirements to be classified as money.
The Reserve Bank Deputy Governor Francois Groepe stated,
“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’”
Cryptocurrencies are popular globally with Bitcoin and Ethereum being the favourites over preference of many users. But the challenge around with virtual currency is the regulatory framework that is not in place yet.
The Reserve Bank has established a financial-technology, or fintech, unit to review its position on private cryptocurrencies and to help draw up an appropriate policy framework and regulatory regime. The central bank’s banking practice director Bridget King said, claiming cryptocurrencies aren’t suited to traditional centralized supervision afforded to the banking and financial sectors.
“[S]elf-regulation through self-regulatory organizations (SROs) may be a more likely solution for the regulation of cryptocurrencies,”
“We want to ensure or establish whether there is still compliance with the relevant financial surveillance or exchange-control regulations.”
The South African Reserve Bank isn’t the first to voice reservations about digital currencies. Around mid may, a recent effort by Zimbabwe’s central bank to ban financial institutions from providing services to the cryptocurrency exchanges, although the ban was reversed by Zimbabwe high court.
In India, the ongoing scenario is more or less the same. The Reserve Bank of India in April, had banned banks operating in India to involve in any cryptocurrency dealings. As a result many crypto businesses in the country filed a petition against the RBI in the court, the next hearing of which is due in July.
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