SA Reserve Bank open to blockchain technology

South African Reserve Bank (Sarb) Governor Lesetja Kganyago has expressed openness to blockchain technologies which underlie cryptocurrencies like bitcoin.

Blockchain technology acts as a digital distributed ledger to confirm batches of transactions for the likes of bitcoin and other cryptocurrency technologies like Ethereum.

Blockchain technology, which adopts a decentralised model, also has the potential to disrupt the financial sector by taking over functions such as verifying payments and replacing bank accounts.

“As a central bank, we are open to innovations despite the different opinions of regulators on matters such as cryptocurrencies,” said Kganyago in a speech at a Cybersecurity Conference in Johannesburg on Tuesday.

“We are willing to consider the merits and risks of blockchain technology and other distributed ledgers,” said Kganyago.

Regulators across the globe are approaching blockchain technology cautiously.

In April this year, the European Union, for example, held off regulating blockchain as it adopted a “softly-softly approach”, according to Reuters.

Previous SA warnings

Kganyago’s latest public comments on the blockchain, though, come after the Sarb, National Treasury, the Financial Services Board (FSB), the South African Revenue Service (Sars) and Financial Intelligence Centre issued a warning over virtual currencies in September 2014.

“While there are benefits associated with this new technology, it is difficult to assess those benefits against the risks of something so novel, innovative and technologically sophisticated,” Treasury said in a statement at the time.

“Users of virtual currencies can therefore become susceptible to fraudulent or any other criminal behaviour as they may be less circumspect than usual when faced with the promise of high return investment opportunities.”

Subsequently, Treasury advised South Africans to consider the risks of virtual currencies.

“The relevant authorities will continue to monitor and assess the use of virtual currencies and consult with private sector stakeholders in this regard,” Treasury said at the time.

“Further guidance or regulations may be issued, should the need arise.”

Fin24

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SA Reserve Bank open to blockchain technology