South African Bitcoin Experiment
The South African Reserve Bank, which functions as the country’s central bank, is partnering with blockchain-based solutions provider
Bankymoon to experiment with digital currency regulations. Bankymoon will serve as a “sandbox business” as the team works with Bitcoin and other cryptocurrencies with the ultimate goal of understanding and legitimizing the growing adoption of cryptocurrency. Image Credit: fdecomite/Flickr Until now, the South African government has mostly ignored Bitcoin and other digital currencies, but these currencies are being used more and more in the nation among both individuals and merchants, so the government is trying to be more proactive. Bankymoon CEO Lorien Gamaroff commented to , “The sandbox will only be Bitcoin-focused during this initial phase, but is focused on applying broad regulations to all cryptocurrencies.” Business Tech Support For Regulation
As with any new technology that becomes mainstream, regulation becomes an issue. However, cryptocurrencies and the blockchain technology they are based upon are, by nature, decentralized. Therefore, there is, at some level, a
fundamental tension between the government’s need or desire to regulate and the structure of the technology (not to mention the intent of its users).
However, government regulation of digital currencies could legitimize the technology. Gamaroff believes that regulations will strengthen and give legitimacy to Bitcoin and other digital currencies for novice users, “I think the regulation will move things along and make people on the street comfortable with Bitcoin. With these new regulations, these everyday people can now trust that Bitcoin is not just for hackers and criminals.”
The initiative also enjoys the support of some of South Africa’s leaders and biggest businesses. Former First National Bank CEO Michael Jordaan, for example, believes that digital currency is on track to render central banks and the entire traditional banking model obsolete. Only time will tell whether the government can involve itself in a meaningful way with this kind of regulation — or if the technology will simply continue to expand without that type of constraint.
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.