Online Reporter
New exchange control regulations have been published and they are the most sweeping changes announced in decades —with serious implications for crypto.
Speaking on Moneyweb’s Crypto Pod, Adopting Bitcoin Conference co-organiser Ricki Allardice channels the outrage felt by many in the crypto community.
Some bitcoiners believe the proposed regulations are so draconian they would rather leave the country than place them under the control of the state.
“There’s quite a lot of uproar in civil society about this because it doesn’t just affect bitcoin and crypto holders. This affects the gold community, the silver community, basically anything, except physical property.
“This is extreme overreach. It begs the question: why do we have exchange controls to start with?”
The outrage in the crypto community is understandable, given the founding thesis of Bitcoin and the blockchain as a means of escaping reckless monetary behaviour by governments and their central banks.
These regulations, if passed, will criminalise self-custody of crypto and force bitcoin holders to move their coins onto regulated exchanges, which vastly increases the likelihood of hacks in the future. At present, that threat is low because the number of hot wallets (connected to the internet) is small.
“I think civil society should get upset about this. It could affect everyone.
“The Reserve Bank’s mandate is to defend the value of the rand. Since it was founded, the value of the rand has dropped by 99 percent,” says Allardice.
“So they’ve failed completely in their mandate. And now they think they can tell us how we should be holding our own assets.
“Someone writes these regulations. We need to know who they are and what their conflicts are.
“The asymmetry here is crazy. If these regulations are accepted into law and you are fined for a contravention, then you face five years in jail or a R1 million fine for self-custodying bitcoin. The person who wrote those regulations faces no sanction at all if they get struck down.”
There’s understandable anger in the crypto community at the intended reach of these new regulations — anything built on the blockchain, whether bitcoin, tokenised stocks or stablecoins — are treated the same. They are considered capital, whereas some of these are clearly closer in character to securities.
Many see these regulations as the first step towards expropriation without compensation by the state.
This is no,t a ridiculous stretch of logic, says Allardice. There’s precedent for this: Many South Africans may not know about the confiscation of privately held gold in the US in 1933.
Americans were forced to hand over their gold to the government at around US$20 an ounce. There are numerous other such examples around the world.
“If the SA government passes this legislation and forces people to put their bitcoin onto exchanges, South Africa will become a honeypot of the rest of the world. All the hackers in the world, the Lazarus Group, I’m sure there are US-sponsored state hackers out there doing the same thing.
“Everyone will try to hack and steal that bitcoin. And there’s no guarantee that the government can guarantee that your bitcoin won’t be stolen.”
This is a must-listen podcast for those interested in what these regulations mean from a practical standpoint, and what they can do about it. — Moneyweb
