The governor of the South African Reserve Bank, Lesetja Kganyago, has claimed that cryptocurrencies should not be classified as currencies.
In a report by the country’s local media outlet MoneyWeb, Kganyago noted that Bitcoin and other cryptocurrencies can be seen as assets of investment and stores of value rather than an asset class that can be used as a currency. The central bank’s governor said that cryptocurrencies only offer two of the three criteria that define a currency, saying:
“It is a crypto asset. A currency must meet the following three criteria. 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 an 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.”
Cryptocurrency; “an asset not a currency”
The criticism is not an uncommon one made by those in the central bank space. Many authorities involved in the traditional finance industry argue against the use-case of Bitcoin and digital currencies for exchange. While some countries are opening up the market to involve cryptocurrencies as legal tender, the world is still divided by how to define cryptocurrencies in the economy.
Despite the criticism and the delayed moves to regulate the space, cryptocurrency adoption is still gaining and increasing as more platforms introduce gateways to make cryptocurrency payments. With Bitcoin price becomes more stable and finding a healthy level of support, investors are looking to hold their cryptocurrency – and new investors are looking to enter this space. As the volatility settles, it’s not impossible that cryptocurrencies will find their way into transactions in the market.
Platforms such as Visa, PayPal, and MasterCard including Bitcoin as part of their payment options will also help increase attention to the space, leading to greater adoption and promoting the purpose of the original cryptocurrency.
It is worthwhile suggesting that Bitcoin itself might not be the cryptocurrency to meet the criteria that define currencies, and another blockchain-based cryptocurrency might lead the way to greater use-case in the market. However, Bitcoin as the leading cryptocurrency will likely remain a key player in adoption for the digital currency market.