Recent news reports relating to cryptocurrencies and how South Africans can trade in these assets suggest that the South African Reserve Bank and National Treasury are getting tripped up by their own rhetoric.
To illustrate this point, three years ago VALR, a crypto asset trading platform, was in the process of setting up shop locally. It had funding from international backers and asked Sarb, via an authorised dealer – in other words, a bank – for approval to bring the funds into the country via Bitcoin. Permission was declined. The reason was that Sarb does not view Bitcoin or any other crypto as currency or capital in terms of exchange control regulations.
When contacted for insight, Standard Bank replied that clients are obliged to comply with all foreign exchange control regulations. An Absa spokesperson said that purchasing cryptocurrencies on debit and credit cards is not permissible in SA . Nedbank and FNB would not comment on the matter. “These assets are borderless,” adds Farzam Ehsani, CEO and co-founder of VALR. Without getting too technical, he explains that crypto assets are represented on the blockchain by a public key and a private key . Assuming you can remember this private key in your brain, you could argue that your Bitcoin is now in a “brain wallet”.
New York-based Chainanalysis, a blockchain analysis firm, recently named Mirror Trading International , a South African company trading from Randburg, as the biggest crypto scam of 2020, taking in $589-million’s worth of cryptocurrency across more than 471,000 deposits.
Billions have been lost by people believing in a quick fix. Love or leave it. Government must make a stand urgently.