The story of Bitcoin’s regulation continues. Today’s turn goes to beautiful country South Africa. The government had been talking about Bitcoin for some time now. They even ran a ‘Bitcoin trial’. In terms of willingness to accept, we love the idea of a trial. It beats saying no from the start without even considering.
The South African Reserve Bank is responsible for considering Bitcoin’s regulation. After reviewing the results of the Bitcoin trial, they decided to warn the South African people against the risks posed by cryptocurrency Bitcoin. The official statement being that the virtual currency had ‘no legal status or regulatory framework’. We’ve heard that one before, in fact, I think most people are getting tired of that reason by now. Still, the positive part of these conclusions is that these countries, even though they don’t like Bitcoin, still won’t ban it. People are allowed to use the cryptocurrency at their own risk.
The South African Reserve Bank’s decision follows the news that Standard Bank had been running a Bitcoin trial. The multinational bank proclaimed afterwards that it would not be launched to customers.
The trial was developed by a company called Switchless. In order to see how Bitcoin would work from within a large multinational banking environment, the company developed a ‘fully operational and integrated Bitcoin portal system’. Basically, this would mean Standard Bank had an exchange and trading interface. A legitimate bank offering a service like this would be an enormous advantage for Bitcoin. It would stimulate worldwide mainstream acceptance. Because of the magnitude of this system, people were hoping Standard Bank would launch this platform to its customers.
Unfortunately, the system never made it to the public. During the testing, it was restricted for internal use only. Not a single customer had been able to use or even see it in action. After the testing phase, Standard Bank said that “although the testing was satisfactory and yielded interesting results, we are not planning a public release anytime soon”. A detailed explanation as to why there will be no official launch was not given. It’s possible the Mt. Gox situation made Standard Bank think twice about accepting Bitcoin, but that was never confirmed.
After this decision, the South African Reserve Bank warned the South-African people about Bitcoin. “Bitcoin has no legal status or regulatory framework. Thus, it poses a number of risks for those that would choose to transact with it such as the lack of guarantee of security, convertibility or value,” said Hlengani Mathebula, head of group strategy and communications at the South African Reserve Bank.
“The South African Reserve Bank is actively monitoring the developments around virtual currencies to inform any future regulatory approaches that may become necessary within the South African jurisdiction,” Mathebula said. The South African Reserve Bank and the National Treasury (the Ministry of Finance) together constitute the monetary authority in South Africa.
After South Africa’s warning, Israel responded by warning its people as well, but also adding that it was considering regulation of Bitcoin. Israel, home to pioneering firms in hi-tech fields such as cryptography, has emerged as a bitcoin hotspot.
It’s a shame South Africa didn’t add that last line about regulation, as well. The coin is becoming popular at a rapid pace in the country. According to CoinMap, South African companies have already started to accept Bitcoin. Bitcoin fanatics in the African country hope that this is just the start.
Regulation is an important topic, and lots of countries are shedding their light on the cryptocurrency. It’s only a matter of time before one country puts a fully functional legal framework around Bitcoin. Let’s hope this framework will respect Bitcoin’s characteristics because that will be the only way to gain the people’s respect.