Cryptocurrency23.01.2025

Warning about memecoins in South Africa

South African Reserve Bank governor Lesetja Kganyago was perplexed by U.S. President Donald Trump’s decision to launch a pair of memecoins with his wife Melania days before his inauguration for a non-consecutive second term.

While he said he was “baffled” by the approach taken, Kganyago argued that the government and regulators should not dictate which financial products consumers can or cannot use.

Kganyago believes that a regulator’s responsibility is to ensure transparency and fairness in financial products so consumers can make informed decisions.

Therefore, if a crypto asset or service behaves like a deposit, lending instrument, or investment product, it must be regulated as such.

Taking his argument further, if a crypto token behaves like a regulated financial product and launches in South Africa without the necessary approvals, there could be consequences.

Memecoins are a kind of cryptocurrency with questionable intrinsic value and high volatility. They rely on social media tailwinds to drive up their price and can plummet in value as rapidly as they climb.

Trump and the First Lady unveiled memecoins — $TRUMP and $MELANIA — that whipsawed the market by sapping flows from Bitcoin and smaller tokens while drawing criticism from industry executives.

The Trump memecoin hit an overall market value of more than $15 billion (R278 billion) on Sunday but slid below $7.5 billion (R139 billion) on Tuesday.

Bloomberg reported that an 80% share of the $TRUMP token is owned by two related entities whose holdings will be unlocked over three years.

These are a Trump Organization affiliate called CIC Digital, and a related entity called Fight Fight Fight — whose name echoes the words Trump mouthed after a failed assassination attempt while on the campaign trail.

The Trump and Melania memecoins drew criticism from some industry executives, partly over the worry that they risk making crypto look frivolous.

However, some investors later embraced the notion that the move further incentivizes Trump to embrace crypto-friendly policies.

Bloomberg reported that Trump is considering an executive order designating the asset class a “national priority.”

While it’s surprising that Trump didn’t issue an executive order regarding crypto, “one should be forthcoming”, though it may not be substantive, TD Cowen analyst Jaret Seiberg predicted.

Trump became an ardent supporter of the digital-assets industry on the campaign trail after previously branding Bitcoin a scam. He pledged to make the U.S. the world’s crypto capital and backed the idea of creating a strategic Bitcoin stockpile.

He said it would be his administration’s policy to keep 100% of all Bitcoin it currently holds or acquires. This includes Bitcoin obtained through asset seizures as a result of criminal investigations.

However, asset seizure experts have warned that this policy would not be practical or legal, as some of the cryptocurrency seized needed to be returned to victims of scams and other crimes.

Kganyago gave his views on the Trump memecoin while speaking on a panel about the future of cryptocurrency at the 2025 World Economic Forum in Davos, Switzerland.

Panel moderator and Business Insider international executive editor Spriha Srivastava asked speakers to weigh in on the topic.

Anthony Scaramucci jokingly threw the question to Kganyago — the only central banker and crypto sceptic on the panel.

Scaramucci is the founder and managing partner of SkyBridge Capital and briefly served as White House communications director during Trump’s first presidency in 2017.

“Can I just ask the governor? Are they trading the Trump memecoin in South Africa, or no?” he said.

Kganyago used the opportunity to drive home an earlier point about how financial regulation should be divorced from politics.

“Well, I’m just baffled about the approach taken,” he said.

“Here is my thing. I don’t think it is for government or regulators to tell financial consumers which products should be available and which should not be used,” stated Kganyago.

“Our duty as regulators is to make sure that the products that are there are transparent and fair to consumers, and that consumers understand the product that they are involved in.”

Kganyago explained that the South African Reserve Bank does not regulate products, it regulates activity.

If a product behaves like a deposit, lending instrument, payment platform, or derivative, it will be regulated accordingly.

“It’s not for governments to decide — even campaign in favour of one product and against another. I don’t think that that is the space that regulation should be in.”

Kganyago’s remarks came in the context of an earlier exchange between the other panellists over what he saw as the crypto industry’s attempts to influence financial regulation in the U.S.

He warned that if pro-crypto regulations are going to be established by ousting politicians from office, the opposite could also very easily happen.

“Mark my words, it will happen that some other group that wants to bring down crypto would do the same thing,” Kganyago said.

“If regulation is going to be established through the power of money, then we have a problem,” he continued.

“That, for me, is a regulatory capture.”

The other panellists disagreed, with Coinbase co-founder and CEO Brian Armstrong saying the impact of pro-crypto groups on the elections was “democracy working”.

He said that there were plenty of pro-crypto voters in the United States but not many anti-crypto voters — an opportunity Donald Trump’s team saw and seized.

Anthony Scaramucci, founder and managing partner investment firm SkyBridge Capital and former White House communications director

Regarding the impact of Trump’s memecoin on the crypto industry, Scaramucci said he was on the side of insiders who warned that it was a net negative.

“I’ll just say a couple couple of quick things. Number one, when you vote for Donald Trump, you get the whole thing,” Scaramucci said.

“He’s pro-crypto, but then you’re going to get everything that’s associated with Donald Trump.”

While some people inm the industry might be alarmed that Trump launched a memecoin, people who understand his personality were not that surprised.

“The reason I believe it hurts the industry is that you have older people in politics and policymaking that still do not understand the industry,” he said.

Scaramucci said that when people are introduced to crypto for the first time, he doesn’t believe it’s beneficial if they do so through a memecoin like Trump’s.

“I think I just think it’s going to slow down some people in the regulatory process,” he said.

Brian Armstrong, Coinbase CEO

Armstrong broadly agreed but offered an alternative view.

“You have to be a little bit careful when looking at new innovations because oftentimes they start off looking like a toy,” he said.

“If you remember the very early Internet, there were a lot of blinking gifs and silly cat photos — and it turned out that 20% of global GDP is now e-commerce.”

Armstrong said another way to think about memes is like collectables or artwork.

“I think people should be able to create artwork and put it out there. Trump happens to be the most famous person in the world right now, so that’s probably why it rocketed up so quickly,” he said.

“So, I don’t know exactly how this will play out. Memes are actually kind of the currency on the Internet. A lot of ideas can concisely be communicated in a meme and humor is a way for people to push against ideas that are no longer popular and make fun of them a little bit.”

Armstrong said people’s memes go viral on the Internet, but they don’t make money on it and it’s an interesting idea to monetize them.

That said, as Coinbase, Armstrong said they don’t try and recommend any assets to people.

“We just have our listing standards and, to the governor’s point, anybody who meets the minimum listing standards — we let the market decide at that point.”

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