The governor of the South African Reserve Bank, Lesetja Kganyago, has warned that cryptocurrency groups lobbying to influence elections and government decisions in the United States set a dangerous precedent.

He also dismissed calls for governments to hold strategic reserves in bitcoin, saying cryptocurrencies are no different from other commodities as reserve assets.

The details

  • Kganyago, speaking during a panel session at the World Economic Forum in Switzerland, said that crypto lobbyists trying to influence financial regulations can lead to “regulatory capture.”
  • Per a Reuters report, large crypto companies spent more than $119 million to support pro-crypto congressional candidates in the US.
  • These companies, including Coinbase and Ripple, played the long game, hoping that the move would pave way for the easy passing of crypto-friendly legislation.
  • Kganyago expressed displeasure at this, adding that governmental policies and regulations influenced by money in such a manner spell problems.
  • He watered down claims for governments to hold bitcoin reserves, saying that the digital asset has no advantage over any other commodity such as beef, apples and mutton.
  • In addition, Kganyago said that these bitcoin reserve calls are nothing more than the result of crypto lobbying groups trying to influence government decisions.

What was said

  • Kganyago, commenting on the activities of lobbyist groups to influence decisions, said:

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

  • On bitcoin reserve calls, he said:

“I would have a significant problem with a lobby that says governments should hold this asset or hold that asset. There is a history to gold. There was once a gold standard... If we now say ok, bitcoins. What about platinum? What about coal? Why don't we hold strategic beef reserves, mutton reserves, or apple reserves? Why Bitcoin?”

Zoom out

  • South Africa currently holds the most advanced crypto legislations on the continent.
  • In 2022, the country recognized cryptocurrencies as financial assets and exchanges as financial service providers, effectively legalizing the asset class.
  • It has since issued licenses to more than 240 crypto firms operating in the country.
  • Kganyago’s remarks highlight that while African nations are gradually embracing crypto through recently enacted legislation, their approach remains more cautious compared to the enthusiasm seen in Western countries.
  • African regulations often mirror Western approaches, but whether pro-crypto legislation in the West will inspire similar shifts across the continent remains uncertain.