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South African Central Bank Open to Cryptocurrencies and Blockchain Tech

Last Updated March 4, 2021 4:50 PM
Samburaj Das
Last Updated March 4, 2021 4:50 PM

South Africa’s central bank is open to the innovation of cryptocurrencies and blockchain technology, the bank’s governor revealed in a speech given in the cybersecurity conference in Johannesburg, yesterday.

The South African Reserve Bank (SARB) organized and hosted a cybersecurity conference in Johannesburg yesterday. While opening the conference, Lesetja Kganyago, the governor of SARB, spoke about new innovation in the field of finance and financial services. Notably, the central bank’s governor stated that the institution is receptive to the breakthrough ideologies and innovation bought on by cryptocurrencies.

He stated:

As a central bank, we are open to innovations despite the different opinions of regulators on matters such as cryptocurrencies. We are willing to consider the merits and risks of blockchain technology and other distributed ledgers.

He underlined the SARB’s “balanced approach” to such technological innovations, adding that the bank will consider its oversight and responsibilities in monetary and macroprudential policies in the face of new financial products and services.

A Different Take on Bitcoin

The Governor’s comments are markedly different to the general stance on digital currencies taken by South Africa’s financial and regulatory authorities in the past. For instance, a joint advisory  [PDF] issued by the country’s National Treasury in 2014 alerted citizens to be aware of the risks associated with dealing or using virtual currencies.

The alert read:

The National Treasury, the South African Reserve Bank, the Financial Services Board, the South African Revenue Service and the Financial Intelligence Centre would like to warn members of the public to be aware of the risks associated with the use of virtual currencies for either transactions or investments.

“Innovation Cuts Both Ways”

While the advances and potential of FinTech and new innovative financial services are clear to see, the governor underlined the ever-increasing threat landscape at a time when central banks are seeing cyber-heists of staggering proportions.

“Even central banks are not immune to such attacks,” Kganyago stated, referring to the recent high-profile attacks on the SWIFT network which saw the Bangladesh Central Bank lose over $80 million from its NY Federal Reserve account. Advances in the field of cryptography inherently improve decryption technology which would be used against a bank’s cybersecurity infrastructure, he opined.

He further added:

As a central bank and regulator in the financial sector, the SARB would be remiss in its duty if it ignored the growing risks emerging from the financial services sector’s increasing reliance on cyberspace and the internet.

A Bitcoin-friendly Hub?

South Africa has notably played host to the African continent’s first-ever bitcoin conference in 2014. In April 2015, a two-day bitcoin conference was held in Cape Town, with bitcoin, blockchain, and Fintech startups focusing their efforts to break into the large remittance industry in Africa.

In March 2016, South Africa’s biggest online marketplace, Bidorbuy, gave bitcoin the green flag by enabling bitcoin payments for both buyers and sellers on the marketplace. With over 30 million page views a month and among the most popular websites in South Africa, every item sold on the marketplace can now be bought with bitcoin.

More recently, Kerri Crawford, a technology lawyer based in Johannesburg, explored the possibility of bitcoin gaining regulation and equally importantly, recognition, in South Africa, where its usage isn’t illegal.

Featured image from Shutterstock.