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USE OF CRYPTOCURRENCIES ILLEGAL - CBS AFFIRMS ITS STANCE

By Manqoba Makhubu | 2017-09-28

THE Central Bank of Swaziland has made a very bold statement and affirmed its stance that the use of virtual currency remains illegal in the country for now. This comes at a time when central banks of several countries have acknowledged virtual currencies, especially Bitcoin as a currency for the future while others are also skeptical due to various concerns most of which are regulatory worries. The cryptocurrency discussion came up during the Central Bank of Swaziland (CBS) annual report 2016/17 presentation held yesterday at Sibane Hotel in Ezulwini. The matter was first attended to by CBS General Manager Finance Philile Nxumalo while responding to a question from one of the participants. The participant asked what the CBS was doing to engage stakeholders on the emergence use of cryptocurrencies as other countries were already engaging stakeholders on their use. Nxumalo modestly explained that the CBS does not issue cryptocurrencies (Bitcoin) at present. She reminded the participants about a cautionary statement that was issued by the bank. “The reason of the cautionary statement was to effectively alert the public that the bank is aware that there are cryptocurrencies, there is Bitcoin, but at the moment there are two key characteristics that make it difficult for the bank to regulate or be in charge of what is happening in that space. Those two characteristics are the speed and anonymity that is happening in as far as these currencies are concerned,” she said. Similar to what the CBS has done, Nxumalo said a lot of regulators have embarked on research and development in an effort to understand the space. “But the public must be aware that it is still not regulated and they need to exercise the necessary precaution,” she said. She said should there be new developments; the bank will provide an update to the public. Making his closing remarks, CBS Deputy Governor Mhlabuhlangene Dlamini just hit the nail on the head and vividly stated that cryptocurrencies are illegal. He said this was based on the Central Bank of Swaziland Order, Section 22 and 23. common practice Asked if it was common practice for central banks to regulate virtual currencies, Dlamini said they should be regulated. “Every currency has to be issued by a sovereign. So if you purport to be a currency and you are not issued by a sovereign, by default you are illegal. There are no two ways about it. They want less regulation, but that cannot be the case, because an economy belongs to the sovereign. You cannot therefore come into someone else habitat and then control how they do things, it doesn’t work like that,” he said mincing no words. The CBS Order 1974 stipulates that only notes and coins issued by the CBS shall be legal tender in the country. To date, the CBS has authorised lilangeni and the South African rand as legal tender. Dlamini said they had come up with a temporary cautionary statement while they were still doing their research. “We will be issuing our final position which will be basically what I have just said,” he said. Adding, CBS Governor Majozi Sithole said they have embarked on research and have sent their officers for a fact finding mission to other countries including Botswana and Malaysia because their aim was not to stand in the way of innovation, but to ensure that should something go wrong someone will be accountable for that. He said their other intention was to safeguard the populace against fraudulent activities that comes with the use of cryptocurrencies. For example, he said these currencies were used as pyramid schemes. “Because no one has been arrested yet does not mean that these virtual currencies are legal. We also want to make sure that should something go wrong someone needs to be accountable,” said the governor.

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