Cryptocurrencies are cyber tokens says South Africa's central bank

The South African Reserve Bank (SARB) continues to provide policy guidance on cryptocurrencies and how they should be treated in the Southern Afrikan country. In one of its latest statements, South Africa's central bank said that it considers cryptocurrencies as "cyber tokens" as they dont meet the criteria to be classified as currencies.

“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’,” said Francois Groepe, Deputy Governor at the South African Reserve Bank.

With the growing popularity of Bitcoin and Ethereum even among non-technical people, it has become a constant issue as to how they should be classified and/or regulated. To this extent, earlier in 2018 the South African Reserve Bank established a unit to look into policy around FinTech. The FinTech unit strategically reviews emerging FinTech solutions (e.g. cryptocurrencies) and assesses their related use cases. Groepe explained that the unit's primary responsibilities are expected to include the facilitation of the development of appropriate policy frameworks for the SARB across the FinTech domain "by robustly analyzing both the pros and the cons of emerging FinTech innovations as well as the appropriate regulatory responses to these developments," said Groepe when announcing the extablishment of the SARB's FinTech unit earlier in 2018.

Although some might view the SARB's statement on cryptocurrencies as negative, it is a less harsh conclusion than those of other central banks in Afrika. During January 2018, Godwin Emefiele, Governor at the Central Bank of Nigeria, said investing in Bitcoin is a gamble, while others like the central bank of Kenya and a Namibia have effectively banned cryptocurrencies.

“We want to ensure or establish whether there is still compliance with the relevant financial surveillance or exchange control regulations,” said Groepe.

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