CBE TO ALLOW CRYPTOCURRENCY IF…

MBABANE – Is CBE mulling to legitimise cryptocurrency in the kingdom? 

This question arises from Central Bank of Eswatini’s (CBE) disclosure to the effect that they had been closely monitoring digital currency with a view to collate a regulation mechanism.

Steemit explains that there are two types of digital currency: a cryptocurrency and a crypto asset. A cryptocurrency was explained as the digital monetary system that fuels a blockchain platform. On the other hand, a crypto asset was defined as simply a digital token built on top of an existing blockchain fuelled by the cryptocurrency innate to that blockchain. It was explained that Bitcoin (BTC), one of the most commonly known currencies, is considered an original cryptocurrency. Others include Litecoin (LTC), Ethereum (ETH) and Ethereum Classic.

CBE Governor Majozi Sithole disclosed that the Fintech division within the banking industry regulator had been tasked with monitoring both countries within the southern African region, especially in South Africa and overseas, with intent to learn how they could possibly regulate digital currencies.

decision

“We have not changed from the stance that if you decide to trade in digital currencies, do so at your own risk. This decision is purely based on safeguarding against some people who take advantage of the platform to create pyramid schemes,” said Sithole at Royal Villas yesterday. 

Sithole explained that cryptocurrencies and crypto assets were being interrogated because in some instances it becomes difficult to determine what a genuine cryptocurrency is since some of them do not have the features of a currency. In the same vein, he said crypto assets could not be ignored as well.
 “Literally, every week we get reports as to what happens regionally and internationally with a view to learn what is happening in the digital currency space,” emphasised Sithole.

Asked to precisely state whether the ultimate objective of training their staff on digital currency and monitoring what happens world-over was to develop a regulation framework or allow cryptocurrency in the near future, Sithole confirmed that they were undertaking the exercise in order to come up with a regulation strategy.

innovation

“We cannot ignore digital currency or think it will vanish. If we find that we are running behind yet it is an innovation seen to be beneficial, we will not stand in the way. We will allow it to continue, then come up with a regulation strategy. If we can find way to regulate digital currency before introduction, it would be even much better, but we will definitely not stand in the way (should the need arise),” said Sithole.

Eswatini Bankers Association (EBA) Chairman Dennis Mbingo, said EBA welcomes the central bank’s efforts to study the possibilities cryptocurrencies offer. He said they had been advised by the governor of the intent and believed it was of key importance.

“There is growing public participation in an asset class that is unprotected and with no policy guidance. As a result, there is no or little protection of consumers when things fail. Conversely, there is also insufficient understanding of some of the benefits that the technology that drives cryptocurrencies offers to any economy,” said Mbingo.  

promises

Mbingo advised that emaSwati should tread very carefully on any investment that promises returns and protection that may be ‘too good to be true’.
A bitcoin trader who spoke to the business community on condition of anonymity, said he was pleased that CBE were closely monitoring digital currency with a view to come up with a regulation strategy. He claimed that there were impressive monetary gains that could be amassed by both individuals and the economy in general, should it be legitimised in the country.

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