REGULATION WILL HELP BITCOIN GROW
LAST WEEK, the SA Reserve Bank (Sarb) released its consultation paper on policy proposals for crypto assets after engaging constructively with many participants in the cryptocurrency ecosystem, including Centbee.
In June last year, I was invited to address Sarb and it may have surprised some when I said: “The Reserve Bank is letting us all down by not providing enough regulation.” Failure to regulate creates an opportunity for public abuse and deception.
Money is a fundamental part of the way any society operates and governments have controlled how it is created and used. I have spent the majority of my professional life either working for, or building banks. They are relatively fragile financial entities, as the 2008 global financial crash reminded us. They pose systemic risk to the fabric of society and historical bank crashes have set entire countries back by decades.
Central banks were created to try to control these risks, however, like any government-run business, they have a patchy record.
I was a founding member of a team that launched eBucks.com, the world’s first bank-backed digital currency, in 2000. Our original vision was to create an entirely new digital currency that could be used to transact freely on the internet. Years later, I was fascinated by Satoshi Nakamoto’s Bitcoin White Paper, as I recognised the same spirit and intentions.
Bitcoin is one of the critical financial innovations of our time.
In 2016, I took a giant leap of faith and co-founded a Bitcoin payments start-up called Centbee. We provide an app that makes Bitcoin the easiest way for people to pay each other.
Co-founder Lorien Gamaroff and I have been regularly invited to provide advice and education to central banks across the world. We’re extremely fortunate to be based in South Africa, a nation that has one of the most robust and innovative banking systems worldwide. We have a healthy relationship with the Reserve Bank, which has a relatively open view towards cryptocurrencies.
People often think of regulation as “establishing controls”, but it also means “to make regular”. Regulation helps to bring order to a situation, bringing the chaotic to the mainstream. Although early adopters typically have a high-risk appetite, most people shy away from disorder, especially when it’s associated with illegal activity.
If we truly want Bitcoin to succeed, it needs to be owned and used by hundreds of millions of people. To achieve that, Bitcoin has to be perceived as safe, easy to use and easily available. We must recognise that regulators, as the agents of government, are the gatekeepers.
Governments are challenged by Bitcoin because they have a very limited ability to control the technology.
At Centbee, we believe it is more fruitful to regulate apps and use cases than to attempt to control the cryptocurrencies themselves.
I am confident that a transparent and respectful approach towards regulators will help governments develop enabling legislation.
Regulation can help customers and existing financial institutions gain more comfort in cryptocurrencies and drive the adoption of Bitcoin.