Cryptocurrency is a sophisticated pyramid scheme, Sarb warns
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Cape Town - The South African Reserve Bank has no plans to recognise cryptocurrencies such as Bitcoin, which has created frenzy around the world.
Reserve Bank Governor Lesetja Kganyago said cryptocurrency did not meet any requirements of a currency and described it as a sophisticated pyramid scheme.
Kganyago was responding to a question from an economics student during the finals of the Nedbank-Old Mutual Budget Speech competition in Cape Town.
The student had asked about the future and the economic impact of financial technologies including cryptocurrencies.
“There’s no such thing as cryptocurrency. A currency must meet the following criteria, it must be recognised as a store of value, it must be accepted as medium of change and these crypto things are not. They are only valid amongst the people who think they are clever, that they have got a head start in a convoluted sophisticated pyramid scheme,” he said.
“To become a currency, they must become a unit of accounts and it must meet all three. You can’t pick the one you like, ”said Kganyago.
Kganyago said his comments did not infer that the Reserve Bank was against digital transformation and cited the Khokha project as an example of the Reserve Banks success in digital.
“The day a fintech company or Bitcoin compiles with its annual statements, maybe it can become, but for now it’s not a currency. With project Khokha, we were able to settle the total wholesale transaction that would have taken the whole day to settle but we were able to settle it in 45 minutes and what that taught us, there was potential for the technology,” he said.
Kganyago was among the VIP guests at a gala dinner held at The Westin Hotel in Cape Town for the announcement of the winners of the Budget Speech competition, where undergraduate and postgraduate students were tasked to analyse and share their insight on economic matters facing the country.
Wits University student, Baneng Naape, walked away with the R150 000 prize for the submission in the postgraduate level.
University of Cape Town’s Calab Qoyo took home R60 000 for clinching the undergraduate level competition.
The winners were crowned by the Deputy Minister of Finance, Mondli Gungubele who delivered keynote address.
Old Mutual chief executive Peter Moyo said the competition motivated students in economics and finance to contribute in constructive solutions facing South Africa.