A Blockchain-based solutions provider in South Africa, Bankymoon, has been selected by the central bank of the country to be the sandbox business in testing out digital currency regulations.
The South African Reserve Bank, essentially, the central bank of the country, will begin experimenting with different regulations surrounding Bitcoin and other cryptocurrencies with an eye to legitimize and understand the growing trend.
Testing the waters
The South African government has up until now mostly turned a blind eye to Bitcoin and related digital currencies, but this marks a big step towards regulating Bitcoin in a country where it is flourishing with users and merchants alike.
Lorien Gamaroff, the CEO of Bankymoon, admits that it is still the early days in their dealings with the central bank because of its hesitancy to jump in too deep, too quickly.
“All we are doing at this point is seeing how far this relationship will go on within this sandbox,” he says.
“This is because the Reserve Bank is very hesitant to give a stamp of approval on anything that comes out. The sandbox will only be Bitcoin-focused during this initial phase, but is focused on applying broad regulations to all cryptocurrencies.”
To regulate or not to regulate
With the mainstream starting to pick up on Bitcoin and digital currencies, there is a thorny issue that always arises. The very nature of Bitcoin is to be decentralized, but the want of governments to restrict and regulate it is in opposition of this principle.
However, regulating digital currencies does have its advantages, and for the governments it is about adding a level of legitimacy to the technology.
Gamaroff is another Bitcoin innovator who believes that regulations will only strengthen Bitcoin within local economies:
“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.”
Further support in the Deep South
There has been plenty of vocal support from some of the big businesses, and businessmen in South Africa with Michael Jordaan, the former CEO of First National Bank (FNB) saying that digital currency will rival fiat within 10 years.
Jordaan is a big believer in digital currencies expressing further that their model will soon make central banks obsolete. He also believes that the entire banking model could collapse with the uptake of Bitcoin with its low fees.