Cryptocurrencies Are Tokens, Not Currencies, Says South African Central Bank
The Central Bank of South Africa, South African Reserve Bank (SARB) reportedly favors referring to cryptocurrencies as “cyber-tokens” instead of bracketing them as currencies, claiming they lack the proper attributes of money in the wider economy.
Cryptocurrency Lacks Currency Traits
According to Francois Grope, Deputy Governor at South African Reserve Bank, when cryptocurrency is weighed on the scale of economic standards, it does not meet the grade of money, Bloomberg reported.
“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,” said Grope.
Grope emphasized, “We prefer to use the word ‘cyber-token’.”
Earlier this year, akin to South Africa’s stance on cryptocurrency, the Central Bank of Israel classified digital currencies as “financial assets” rather than a currency — citing cryptocurrencies’ anonymous nature as a risk for banks.
Since the rise in the value of many cryptocurrencies last year, governments around the world have been in a quandary on classifying them. Governments like Japan’s have given a status as legal payments (though not legal tender), while others are mulling over an outright ban on cryptocurrencies.
Bloomberg said similar views surfaced in a G20 document, which categorized cryptocurrencies as an asset. Klaas Knot, chair of G20’s financial regulator the Financial Stability Board, asserted that cryptos could be called crypto tokens or crypto assets, but not cryptocurrencies.
“I don’t think any of these cryptos satisfy the three roles money plays in an economy,” said Knot.
African Fiat Currencies Often More Volatile than Cryptos
Not long ago, SARB announced it would set up a self-regulatory division to oversee cryptoverse developments in the country. The self-regulatory division is aimed to identify and prevent systemic risks to safeguard the country’s citizens, while at the same time not hindering the burgeoning industry.
At the time, SARB’s director of banking practice Bridget King stated:
“Regulating cryptocurrencies prematurely could have the negative consequence of throttling the growth and innovation of the industry. Besides, 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 crypto ecosystem is still maturing and for governments to define their stance on digital currencies is a hard row to hoe. Bitcoin may not be classed as a currency by authorities, but when compared, it is by far more stable than volatile African currencies. The southernmost country in Africa has been a fertile land for cryptocurrencies, and an emerging hub for crypto mining.
Will cryptocurrency be classed as actual currency any time soon? Share your views in the comments section.
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