The South African Reserve Bank (SARB) has warned against the risks posed by cryptocurrency, Bitcoin – noting that it has no legal status or a regulatory framework.
The SARB’s position on Bitcoin follows the news that Standard Bank had been running a Bitcoin trial, which it later stated would not be launched to customers.
As defined by Reuters, as a crypto-currency, bitcoin is passed between two parties digitally and can be traded on exchanges for real-world currencies. Its value fluctuates according to user demand but it is not backed by any government or central bank.
Bitcoin’s platform has begun to gain real traction in recent months forcing governments and regulators to look for the best way to respond.
“Bitcoin has no legal status or a 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 SARB.
“The South African Reserve Bank (SARB) 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 SARB and the National Treasury (the Ministry of Finance) together constitute the monetary authority in South Africa.
A bitcoin is currently worth about $264 (Mt.Gox, 19 February), with its value fluctuating widely amid increasing visibility. Last September, a bitcoin was worth around $150, and by late December the value was near the $1,000 mark.
Israel said on Wednesday that it was considering regulation of bitcoin and warned citizens that using such decentralized virtual currencies was risky, Reuters reported.
Israel, home to pioneering firms in hi-tech fields such as cryptography, has emerged as a bitcoin hotspot.
In the US, meanwhile, Robocoin is set to install the first automated teller machines that enables users buy and sell bitcoin.
According to CoinMap, a few South African companies have already started to accept Bitcoin, predominantly in the Western Cape.
They include a paintball shop, a taxi service, Fire & Ice – Fire dancers Cape Town, an internet marketing company, and a tax consultancy.
In recent weeks, bitcoin was hit by attacks from unknown computer hackers that led to problems at two exchanges.