South Africa’s 2nd Largest Grocer Won’t Accept Bitcoin without Regulation

It was believed that South Africa’s second-largest supermarket chain, Pick n Pay, would start accepting bitcoin in one of its stores. However, a fresh report indicates that that is not the case.

On the 18th September, payments software development firm Electrum made the announcement. It said that it had enabled Pick n Pay to accept bitcoin payments in store. For a limited time, it was reported that customers at Pick n Pay’s head office store have been able to use the digital currency to buy groceries and services. During the check-out process, customers simple scanned the QR code through a bitcoin wallet app on the customer’s smartphone. The bitcoin infrastructure for the project was provided by South Africa-based Luno, a global bitcoin company.

Jason Peisl, an executive at Pick n Pay, said:

“Cryptocurrency and bitcoin are still relatively new payment concepts, yet we have been able to effectively demonstrate how we are able to accept such alternative payments.”

It’s thought that the goal was to determine what customers’ of Pick n Pay feel regarding the use of a digital currency. The next step then would be to start accepting the cryptocurrency across all its store locations in South Africa.

Electrum MD Dave Glass, added:

“We’ve worked closely with PnP for several years as a key technology provider. Our mission is to support innovative enterprises like Pick n Pay, and together we use the advanced Electrum software-as-a-service technology to move quickly on new opportunities, whilst at the same time delivering the best possible shopping experience.”

Regulatory Framework Needed

Yet despite claims that Pick n Pay is accepting bitcoin, it appears that isn’t the case.

In a separate report, the supermarket chain said it was ‘unlikely to roll out the solution‘ without an established regulatory framework in place.

Richard van Rensburg, Pick n Pay deputy CEO, explained that the test had been limited to their canteen store at the head office and was no longer active.

He said:

“We don’t expect that in the near term accepting bitcoin will unlock any significant new business and we are unlikely to roll out the solution until the payments industry and regulatory authorities have established a framework for managing the risks associated with cryptocurrencies. We have proved to ourselves, though, that it is technically possible to roll out a solution very quickly.”

He added that digital currencies were still in ‘relative infancy.’ As a result, it would take time for them to be accepted as a form of payment.

Rensburg said:

“Progress is unlikely to be hampered by technology but rather by regulatory issues and concerns.”

South Africa’s Central Bank Tests Digital Currency Regulations

In July, the South Africa Reserve Bank (SARB) revealed that it was to begin testing cryptocurrency regulations. For many authorities, regulation is the way forward.

Consequently, SARB has been in discussions with Bankymoon, a blockchain-based solutions provider. SARB has chosen Bankymoon for its first sandbox business to conduct an experiment with digital currency regulations.

At the time, Loerien Gamaroff, CEO of Bankymoon, said the two are working together to determine a future relationship.

He said:

“This is because the Reserve Bank is very hesitant to give a stamp of approval on anything that comes out. The sandbox will only be bitcoin focused during this initial phase, but is focused on applying broad regulations to all cryptocurrencies.”

Such a move, however, will give a formal foundation and deliver legitimacy to bitcoin that people will trust.

Gamaroff added:

“I think the regulation will move things along and make people on the street comfortable with bitcoin. With these new regulations, these everyday people can now trust that bitcoin is not just for hackers and criminals.”

‘Too Risky’ to Issue Digital Currency

However, despite South Africa’s interest in cryptocurrencies it doesn’t feel now is the right time to embrace it.

As a result, the deputy governor of SARB has said that it’s ‘too risky‘ to start issuing its own digital currency.

In August, Francois Groepe, the deputy governor of SARB, said:

“Virtual currencies have the potential of becoming widely adopted. However, for the central bank to issue virtual currencies or cryptocurrencies in an open system will be too risky for us. This is something that we really need to think about.”

Yet, the bank is still interested in exploring the technology. Consequently, SARB has established a three-man team to research cryptocurrencies. It’s hoped that, eventually, the central bank will be able to provide a clearer picture as to where the market stands.

Until then supermarket chains such as Pick n Pay are unlikely to start accepting bitcoin for grocery payments.

Central Banks Can’t Ignore the Crypto Market

A recent report has said that world central banks can no longer turn a blind eye to the digital currency market. According to the Bank for International Settlements (BIS), central banks need to look at them closely as they could pose a risk to financial security.

This report comes at a time when the market has experienced a tough week. China’s crackdown on initial coin offerings (ICOs) and domestic digital currency exchanges has impacted market prices. Several prominent crypto exchanges have already announced that they will be suspending their services. BTCC and ViaBTC will halt operations at the end of September. Whereas, OKCoin and Huobi are expected to stop operating by the end of October.

Additionally, Jamie Dimon, CEO of JPMorgan Chase, hasn’t helped things by calling bitcoin a fraud.

Yet, despite these setbacks in the market, prices have rallied back. At the time of publishing, on the 19th September, bitcoin is trading at $3,973. Over a 24-hour period it has increased its value by 3.44 percent. However, in seven days its remains down by 7.08 percent. Its market cap it worth $65.8 billion.

This is a marked improvement from when it was trading below $3,000 on the 15th September. Trading at $2,947, its market cap was worth $48.8 billion. The fact that the market is climbing again indicates that governments aren’t having much of an impact on the industry as initially thought. China and others may try to stamp out the sector, but it doesn’t appear to be going anywhere. This is good news for the community who are keen for bitcoin to continue to gain prominence. Only time will tell what will happen next.

Featured image from Shutterstock.

South Africa’s Central Bank to Start Testing Digital Currency Regulations

The South African Reserve Bank (SARB) has announced that it will begin testing regulations for digital currencies such as bitcoin.

During the first seven months of 2017, the digital currency market has experienced huge gains with slight drops in between. At the beginning of the year bitcoin was valued at $1,000; however, its price has since climbed through the $2,000 barrier and even scaled further than $3,000 in June.

Recently, though, the value of bitcoin dropped to below $2,000 in light of the scaling debate.

Many in the community previously believed that digital currency was going to undergo a coin split, which pushed its price down as holders keen to make a profit, while they still could, sold the coins they were holding. Of course, now that BIP 91, the network protocol upgrade for bitcoin, has been locked in by miners the value of the digital currency has risen to $2,710, as of the 24th July.

This in turned has had a positive impact on other altcoins, which also took a price tumble when bitcoin did. On the 16th July, Ethereum’s price dropped by 22 percent to $159 and 60 percent from its June high when it was over $400. At the moment ether is trading at $223, according to CoinMarketCap.

Of course, with some claiming that bitcoin has been in a price bubble it has naturally attracted the attention of authorities who think regulation is the way forward.

One organisation is SARB, which is currently having discussions with blockchain-based solutions provider Bankymoon.

In a report from BusinessTech, Loerien Gamaroff, CEO of Bankymoon, said that the provider had been chosen by the bank as its first sandbox business to undertake an experiment with new digital currency regulations.

According to the report, Gamaroff has been part of a number of workshops and seminars focusing on digital currencies within the South African market.

He states, however, that at this stage the two are working together to determine where the relationship can go for future development.

He said:

“This is because the Reserve Bank is very hesitant to give a stamp of approval on anything that comes out. The sandbox will only be bitcoin focused during this initial phase, but is focused on applying broad regulations to all cryptocurrencies.”

He adds that this step toward possible regulation will help at providing a more formal foundation and gives legitimacy to bitcoin that people will be able to trust.

“I think the regulation will move things along and make people on the street comfortable with bitcoin. With these new regulations, these everyday people can now trust that bitcoin is not just for hackers and criminals.”

 South Africa Open to Blockchain and Digital Currencies

Last August, the SARB revealed that it was open to the innovation of digital currencies and the distributed technology ledger with the bank’s governor claiming that the financial establishment is willing to consider the benefits that these technologies present.

At the time, Lesetja Kganyago, the governor of SARB, said:

“As a central bank, we are open to innovations despite the different opinions of regulators on matters such as cryptocurrencies. We are willing to consider the merits and risks of blockchain technology and other distributed ledgers.”

Bitcoin Regulation in South Africa?

At present bitcoin remains unregulated in the nation; however digital currencies aren’t prohibited or banned outright in the country.

As such, the use of them is growing as more people turn their attention to them despite the fact that a joint advisory was released in 2014 warning the public on the risks linked to the use of digital currencies.

According to Kerri Crawford, a tech lawyer at global financial law firm Norton Rose Fulbright based in Johannesburg, she thinks that as the uptake of digital currencies increases there is a chance that South African authorities will take a regulatory approach.

In a blog published in 2016, Crawford said:

“…it is possible that the South African authorities will adopt the approach taken in many other jurisdictions and explore ways in which the regulatory regime could be amended or revised.”

As more jurisdictions think about implementing a regulatory stance toward digital currencies such as bitcoin it could be that they begin to outpace fiat currencies in the future. This was the thinking from Michael Jordaan, the former CEO of one of South Africa’s ‘Big 4’ banks, the First National Bank (FNB).

In June, Jordaan said at the Software AG Innovation Tour 2017 event in Johannesburg that by 2025 digital currencies will compete with national currencies as trading volumes continue to rise.

According to a report he said that cryptocurrencies had the potential to make banks become obsolete as they continue to challenge the current banking model.

Banks Need to Embrace FinTech

Interestingly, his word echo those of former chief of Barclays bank who was reported as saying that the financial services sector needs to embrace the world of fintech if they wish to remain relevant or they could become obsolete.

Anthony Jenkins, the former CEO, said:

“We’re really at the end of the beginning of what we see as a revolution driven by technology with financial services and fintech is really a too narrow categorisation of what’s going on here. As the technologies develop and season, they’re going to create a totally different way of doing banking and financial services.”

His words follow on from a 2015 prediction when he said that there was going to be an ‘Uber-like’ disruption from the fintech sector that would change the current banking system. As a consequence, he believes that in 10 years time those working within the banking establishment will have been reduced by 20 percent, but could go as high as 50 percent.

It remains to be seen what result South Africa’s central bank comes to when it completes its trial looking into digital currency regulations; however, it would certainly be a step forward for the country as it looks at embracing innovative technologies.

By doing so, it will join the likes of Japan, which in April changed their regulations that now considers bitcoin a legal form of payment.

 

Featured image from Flickr via Paul Saad.