Finance minister Gigaba speaks out on Bitcoin regulation in South Africa

Finance minister Malusi Gigaba tackled the question of Bitcoin regulation in a recent parliamentary questions and answers session.

In a written submission by the FF Plus, chairperson of the party adv Anton Alberts asked the minister what the government’s position with regard to the developing market for crypto currencies was, and whether he intended to regulate the market.

Gigaba replied that while cryptocurrencies are currently not regulated – they operate without the authority of central banks – a number of institutions were working to address this.

“As noted, the relevant authorities continue to monitor and assess the use of virtual currencies and consult with private sector stakeholders in this regard. Further guidance or regulations may be issued, should the need arise,” he said.

“While the above position still applies, the National Treasury together with the SARB, FIC, and FSB have also established an Intergovernmental Fintech Working Group in December 2016, to develop an approach and potential revised policy stance towards fintech, including crypto-currencies, and to deal with fast-emerging fintech matters in the financial sector, like crowdfunding, robo-advice, machine learning and alternate payment platforms.”

“A balanced approach is being taken, which is supportive of the objectives of enhanced innovation, competition and financial inclusion in the financial sector, while also reviewing risks related to financial customer protection, money laundering and financial stability.”

In an analysis on the answers given by Gigaba, Alberts said that it was important to strike a balance between innovation and the protection of consumers and investors.

He noted that while it was still early days for the phenomenon of fintech, which is going through a volatile developmental phase similar to the internet in its early stage, it will eventually reach a stable stage where the successful virtual currencies will coexist with fiat currencies.

“The underlying blockchain technology also has a lot of potential to be used for purposes other than creating cryptocurrency. Blockchain technology is a cheap, effective and increasingly safe way to do transactions as well as to transfer money from one person or institution to another,” he said.

Read: Reserve Bank to begin testing Bitcoin and cryptocurrency regulations