Fintech

Zimbabwean Minister Says Cryptocurrency Based Solutions ‘Could Lower Charges for Diaspora Remittances’

12/09/2021 by Idelto Editor

The Zimbabwean minister of finance, Mthuli Ncube, has once again talked up the potential advantages of using cryptocurrencies. In new comments made shortly after visiting the DMCC Crypto Centre in Dubai, Ncube raises the possibility that the country might use cryptocurrency-based solutions to lower the cost of remitting funds across borders.

Understanding Cryptocurrencies

Prior to making these remarks about cryptocurrencies, Ncube has previously urged Zimbabwe to “invest in understanding emerging innovations like bitcoin.” At the time, Ncube, who had just been appointed finance minister, told Zimbabwean authorities to emulate countries like Switzerland which he said were “investing in and understanding bitcoin.”

However, in his latest positive comments about cryptocurrencies, Ncube said:

I visited the DMCC CRYPTO CENTRE in Dubai, which is a fascinating incubation hub for crypto currency and payment solutions. Came across solutions that could lower charges for diaspora remittances.

While some within Zimbabwe’s crypto community on Twitter have applauded Ncube for making such comments, many others are not amused. Instead, they are asking why it has taken a tour of an incubation hub in Dubai to prod the minister into addressing the issue.

Still others like Victor Mapunga, CEO of Flexfintx, are quick to remind the minister that Zimbabwe already has enough blockchain and crypto start-ups. In his reply to Ncube’s tweet, Mapunga wrote:

We already have blockchain & crypto companies in Zimbabwe such as Flexfintx. Work with local players.

Mixed Reaction to Ncube’s Comments

Meanwhile, a report by Techzim concludes that the minister, who tweeted about DMCC Crypto Centre right after the tour, is in fact not aware that Zimbabwe already has start-ups that offer similar solutions. The report then lists some of the blockchain start-ups that already offer faster payments solutions and low-cost, cross-border remittance services.

However, not everyone agrees that crypto is a solution to the country’s currency woes. For instance, Twitter user Senator Jopa Sayeyo wrote:

“When banks stop manipulating the forex exchange rate then maybe then the Reserve Bank of Zimbabwe [RBZ] can consider cryptocurrency. Otherwise, it will lead to a massive crash of the ZWL [Zimdollar].”

What are your thoughts on this story? You can share your views in the comments section below.

Report: Nigerian Securities and Exchange Commission Sets Up Fintech Division for Crypto Research

04/09/2021 by Idelto Editor

Nigeria’s securities regulator, the Nigerian Securities and Exchange Commission (SEC) has set up a fintech division “to study crypto investments.” This was revealed by Lamido Yuguda, the director-general of the SEC during an interview.

Protecting Crypto Investors

In the interview, Yuguda explains that the study’s findings will help inform the SEC of the best ways to regulate cryptocurrency should the Central Bank of Nigeria (CBN)’s February 6 directive be lifted. However, the director-general did not provide a time frame for issuing regulations or state when he expects the CBN directive to be lifted.

Meanwhile, in the same interview, Yuguda explains why his organization is eager to come up with crypto regulations. He explained:

We are looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain.

As previously reported by Bitcoin.com News, Nigeria continues to be an ideal hunting ground for crypto scammers. Many unsuspecting investors continue to lose money to criminals who also appear to take advantage of the country’s lack of laws regulating cryptocurrencies.

Therefore, in order to protect investors, Nigerian regulators like the SEC have issued warnings while the central bank has gone as far as to block the crypto industry’s access to the banking ecosystem.

The Real Reason Behind the Desire to Control Crypto

However, some Nigerian crypto enthusiasts believe that the naira’s continuing depreciation is the real reason behind CBN and other regulators’ desire to control the crypto industry. The continuing shortages of foreign exchange versus the rising demand are blamed for accelerating the naira’s decline against major currencies. Cryptocurrencies are another way individuals can preserve value outside of the faltering naira.

In response to this worsening situation, authorities have imposed restrictions both on crypto and non-crypto entities like the Bureau de Change operators. In addition, the CBN recently took action against six fintech companies after they allegedly violated provisions of their operations licenses.

Yet in contrast to the CBN’s hardline approach, Yuguda insists his organization wants to “work with fintech firms to boost the marketing of domestic securities to prevent capital flight.” He adds that the “SEC is looking to boost savings through investment schemes, which currently have over $9.7 billion under management split between public and private fund managers.”

What are your thoughts on this story? Tell us what you think in the comments section below.

South African Central Bank Governor Reiterates: ‘Crypto Is Not Currency’

30/08/2021 by Idelto Editor

The governor of the South African Reserve Bank (SARB), Lesetja Kganyago, has reiterated the central bank’s longstanding belief that cryptocurrencies like bitcoin are not currencies. According to Kganyago, crypto-assets, as he prefers to call them, are not currencies because they fail to meet the standard of what constitutes a currency.

Crypto and the Currency Test

In recent remarks to Mills Soko, a professor at a South African university, Kganyago asserts cryptocurrencies like bitcoin only partially meet one of the three key characteristics of a currency. Kganyago explained:

One, it must be a generally accepted medium of exchange. Secondly, it must be accepted as a store of value. And thirdly, it must be a unit of account. A cryptocurrency is a store of value. It is a medium of exchange but is not generally accepted. It’s only accepted by those who are participating in it.

However, despite adopting this stance toward cryptocurrencies, the SARB governor insists the central bank must still regulate these assets because “people go and invest in cryptos and when they lose money, they ask what government has done about it.”

Blockchain Technology Useful

Predictably, Kganyago, just like many of his peers, praises blockchain technology saying it “can be useful in many other respects.” The governor also reiterates that SARB, just like central banks around the world, is experimenting with blockchain technology.

When asked if the SARB plans to regulate fintech firms in the same way banks are regulated, Kganyago argued that if the activities of such companies start to resemble those of regulated entities, the central bank will have no option but to regulate. He said:

So, if you are a fintech firm, and you take deposits, we will regulate you like a deposit taker. If you are a fintech firm, and you do money transmission, we will regulate you like a payments provider. If you are a fintech firm, and you sell insurance policies, we will regulate you like an insurer.

Still, Kganyago claims that the SARB understands “the value that the fintech firms bring to the financial sector.” According to him, it is for this reason that the central bank has “created an innovation hub at the Reserve Bank.”

Do you agree with what Kganyago has said about cryptocurrencies? Tell us what you think in the comments section below.

Central Bank Governor: South Africa’s Digital Currency Study Ongoing

31/07/2021 by Idelto Editor

South African Reserve Bank (SARB) governor, Lesetja Kganyago, has once again confirmed that the central bank is presently studying the feasibility of issuing a digital currency. In his remarks at the SARB’s annual general meeting, governor Kganyago suggested his organization has embarked on this study to keep abreast with the growing trend of central banks that are studying CBDCs.

Retail CBDC

In the past few years, several central banks including a few in Africa have similarly announced their CBDC studies. Already, the central banks of Ghana and Nigeria have both revealed they will start piloting their respective digital currencies in the second half of 2021.

However, as the recent Mybroadband report quotes Kganyago explaining, the SARB’s e-rand study will also seek to understand the feasibility of issuing the CBDC for retail purposes. Kganyago explained:

The objective of the study is to investigate if it would be feasible, appropriate and desirable for the SARB to issue a CBDC to be used for retail purposes, complementary to cash, in South Africa.

Crypto Regulation Imminent

Kganyago’s confirmation of SARB’s study of the CBDC comes as South Africa readies to regulate digital currencies. As reported by Bitcoin.com News, a working group known as the Intergovernmental Fintech Working Group (IFWG) recently published a position paper that recommended the regulation of crypto service providers.

Already, several South African banks are blocking clients from using buying cryptocurrencies on overseas platforms. According to reports, this action by banks is being made at the behest of regulators who want the country’s exchange control rules to be extended to include cryptocurrencies.

Meanwhile, no date has been given as to when SARB is expected to complete its study and when the central bank expects to start piloting this.

What is your view on this revelation by the SARB governor? You can tell us what you think in the comments section below.

Central Bank of Ireland Governor Talks Crypto, Praises ‘Secure, Decentralized’ Technology

31/07/2021 by Idelto Editor

Gabriel Makhlouf, the governor of the Central Bank of Ireland (CBI), has published a blog post in which he shares his views on the digitalization of finance. While echoing concerns expressed by his counterparts regarding cryptocurrencies, the official has also highlighted some of their positives.

Don’t Ignore the Positive Elements of Crypto Technology, Central Bank Governor Says

The article titled “Digital Money” was published on the bank’s website on Thursday. In the post, Gabriel Makhlouf discusses the project to issue a digital version of the common European currency. The European Central Bank (ECB) recently launched its “Investigation Phase” and although a final decision is yet to be taken, the governor believes that it is not a question of “if” but rather “how and when” a digital euro will be introduced.

Besides central bank digital currencies (CBDCs), Makhlouf devotes attention to the rise of decentralized money as a factor in the increasing digitalization of finance. Avoiding the “misleading descriptor” “crypto-currencies” and the “less inaccurate” “crypto-assets,” the banker refers to coins, stablecoins, and tokens simply as “crypto.”

“Risks are increasing as individuals consider putting some of their money into crypto,” Gabriel Makhlouf says, listing the lack of transparency, price volatility, high energy consumption, and exposure to fraud among the threats investors and governments are facing. “As things stand today, the negatives surrounding crypto far outweigh any benefits,” the Irish official concludes. However, he also insists that authorities should not ignore the positive elements of cryptocurrency’s underlying technology. The CBI governor notes:

Distributed Ledger Technology (DLT) is essentially a secure, decentralised record of information stored across a network and is a key piece of architecture for some types of crypto.

Makhlouf emphasizes that DLT can reduce the costs of financial transactions and eliminate intermediaries in certain cases while also praising the opportunity to issue smart contracts. “The use of DLT has increased in recent years – it certainly has potential – although it remains to be seen how widespread that will be,” the governor adds.

The importance of DLT is likely to increase as governments around the world examine options to employ blockchain technology in the design of their digital currencies. A recently conducted experiment with the participation of several central banks from the Eurozone and the ECB has indicated that a blockchain-based digital euro would be highly scalable. The tested CBDC system was able to simultaneously process over 300,000 transactions a second, the central bank of Estonia revealed earlier this week.

Do you expect most central bank digital currencies to be based on digital ledger technologies? Let us know in the comments section below.