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JOHANNESBURG — Two major cryptocurrency stories have emerged in South Africa today. The first revolves around the South African Reserve Bank‘s latest stance on cryptocurrencies like Bitcoin and Ether. To me, it looks as if SARB is becoming more hawkish about the space as it says it views cryptocurrencies as being digital tokens rather than currencies. SARB says it thinks cryptocurrencies don’t offer a “stable means of exchange, a unit of measure and a stable unit of value”. It’s fair for SARB to highlight that cryptocurrency prices haven’t been stable (especially in recent times) – that’s a fact. But SARB may be putting itself at risk of completely sidelining a technology which can still seriously become a future global means of exchange, unit of measure and unit of value, especially if big institutions get involved and liquidity improves. (Who knows, maybe one day the Rand will sit on the blockchain and be a cryptocurrency itself?) In the meantime, Magda Wierzycka’s Sygnia seems to think that cryptocurrencies do have a future in South Africa and across the globe as the company outlined plans in its results statement today about plans to launch its own cryptocurrency exchange. – Gareth van Zyl
By Amogelang Mbatha, Ntando Thukwana and Odwa Mjo
(Bloomberg) – South Africa’s central bank chooses to call digital currencies such as Bitcoin “cyber-tokens” because they don’t meet the requirements to be classified as money.
“We don’t use the term ‘cryptocurrency’ because it doesn’t meet the requirements of money in the economic sense of the stable means of exchange, a unit of measure and a stable unit of value,” Reserve Bank Deputy Governor Francois Groepe told reporters in Pretoria on Thursday. “We prefer to use the word ‘cyber-token’.”
Digital currencies such as Bitcoin and Ethereum are becoming increasingly popular, with regulators in some countries struggling to move fast enough to manage them. The Reserve Bank has established a financial-technology, or fintech, unit to review its position on private cryptocurrencies and to help draw up an appropriate policy framework and regulatory regime.
“We want to ensure or establish whether there is still compliance with the relevant financial surveillance or exchange-control regulations,” Groepe said.
The South African Reserve Bank isn’t the first to voice reservations about digital currencies. In January, Nigerian Governor Godwin Emefiele said investing in Bitcoin is a “gamble,” while Lesotho’s central bank said a month later that it won’t offer any recourse to investors who lose money on them. Bank for International Settlements General Manager Agustin Carstens said in an interview with the German newspaper Boersen-Zeitung this week he prefers to call these currencies “cryptoassets.”
From Sygnia’s results statement for the six months ended March 2018
Strategy for 2018/19
We have spent the past six months actively researching a number of new strategic initiatives that will position
Sygnia for the evolving digital future, as well as help its new business development and distribution efforts.
The key initiatives planned for 2018 and 2019 are:
We are in the process of rolling out a revolutionary new retail distribution model which should result in
significant asset flows into Sygnia’s retail products. This model will be expanded offshore in 2019.
We aim to launch SygniaCoin, a cryptocurrency exchange, in the third quarter of 2018. The cryptocurrency
market is evolving at a rapid pace internationally and domestically, and is attracting both domestic and
international flows. With its fintech focus, Sygnia is well-positioned to become the first major financial services
institution to embrace cryptocurrencies and to offer investors a secure trading and execution platform backed
by an international infrastructure, well-designed custody and integration with standard savings products. The
regulation around cryptocurrency exchanges is likely to evolve. The 2018/19 Budget defined cryptocurrencies
as “digital assets that may be used as a medium of exchange”. The South African Revenue Service (SARS)
has already indicated that trading and investing in cryptocurrencies are subject to tax.
We expect further regulatory frameworks to follow. To ensure the highest levels of integrity and security for clients, we are basing our policies, protocols and processes on existing regulatory framework applicable to cryptocurrency exchanges registered in New York State, USA. We will also be able to offer investors the option of holding cryptocurrencies on the Sygnia Alchemy administration portal, alongside their investments through the Sygnia LISP and in SURF.
We intend to significantly upgrade our retail infrastructure which, although capital intensive, will, over the next three years, result in a significant reduction in costs, enhance scalability and provide us with opportunities to expand our operations offshore. We have also embarked on extensive upgrades to the infrastructure of Sygnia Securities and expanding its range of activities to take advantage of stock lending, market-making and third-party execution opportunities. We believe that this has the potential to significantly enhance our profitability going forward.
A range of new products has also been designed to cater to the growing needs of our retail and institutional
investors. This includes a range of Shari’ah investment funds, a Sygnia Cryptocurrency Fund that invests in a
range of cryptocurrencies on behalf of investors, and a Sygnia Activist Fund that will capitalise on Sygnia’s
activist stance. We believe that South African asset managers have become too complacent about the
corporate activities of JSE-listed companies. We intend to invest in companies that provide opportunities to
unlock significant value by positive engagement with management.
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