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Pick n Pay deputy CEO, explained that the test had been limited to their canteen store at the head office and was no longer active.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 Says It’s ‘Too Risky’ to Issue Digital Currency

The deputy governor of the South African Reserve Bank (SARB) has said that it would be ‘too risky‘ to start issuing its own digital currency.

Speaking at the Strate GIBS FinTech Innovation Conference 2017, Francois Groepe, the deputy governor of the South African Reserve Bank, commented on the development of a digital currency such as bitcoin. However, while bitcoin is gaining dominance, he stressed that the central bank needs to ensure that payment methods aren’t abused to fund money laundering or terrorism.

He noted, though, that digital currencies are becoming more recognised as people understand their concept.

As a result, he said that:

“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.”

According to Groepe, though, the central bank has created a three-member team to look into how cryptocurrencies work. The bank is also expected to launch a digital currency sandbox to test how they function.

He also discussed the financial industry and how innovation is changing the sector, mainly through digital currencies.

He added:

“We are witnessing the disruption of financial services. Over the past decade or so, fintech’s attention and publicity has continued to intensify and increase. It is continuing to usher in completely new ways of banking. Developments in the fintech space are part of an evolutionary process driven by innovations.”

Bitcoin Dominates the Market

As of the 23th August bitcoin is trading at $4,239. This is a 6.93 percent increase in 24 hours, but a 0.08 drop in seven days. At press time, the digital currency’s market cap is worth over $70 billion.

Just yesterday, bitcoin’s price was listed at $3,674 as it underwent an early-week correction period. As a consequence, its market cap value dropped to $60.7 billion. However, this price rally has helped to push it back over the $4,000 mark. The recent drop in price is believed to be down to a hashrate shift from bitcoin to bitcoin cash.

According to a recent report, bitcoin cash surged to a new all-time high on the 19th August when it reached $914. Furthermore, the alternative to bitcoin was reported to have mined its first eight megabyte block, clearing nearly 40,000 transactions. According to data from Coin Dance, bitcoin cash had become 69 percent more profitable to mine than bitcoin.

Not only that, but concerns have been circulating the SegWit and SegWit2x debate, which may have pushed bitcoin’s price down.

Despite this, however, the number one currency is still the leader in the field. Ethereum, in second place, has a market cap worth $30.2 billion. Whereas, bitcoin cash, in third place, is valued at $10.9 billion. Nevertheless, fourth placed ripple is close behind with a market value amounting to $10.8 billion.

Are Fears Justified?

Considering the dominance that bitcoin is showing in the market, it’s may be surprising that South Africa’s central bank thinks it’s too risky to start issuing their own version.

Last August, it was reported that The Bank of England had issued its own digital currency. Known as the RSCoin, it shares similar traits to bitcoin such as being managed by the blockchain. However, one of its key differences is that it is centralised within The Bank of England. As a result, only one bank generates each unit of the digital currency.

The bank has keenly embraced the blockchain, which is evident in an excerpt from a quarterly bulletin. It says:

“… the key innovation of digital currencies is the ‘distributed ledger’ which allows a payment system to operate in an entirely decentralized way, without intermediaries such as banks.”

Not only that, but according to the U.K.’s central bank, they don’t see that digital currencies ‘pose a material risk to monetary or financial stability in the United Kingdom.’ However, it will continue to monitor developments in this area.

No doubt aware of how finance is changing, The Bank of England appear keen to maintain a hold on the sector even if that means issuing their own digital currency.

SARB Begins Testing Digital Currency Regulations

Yet, while South Africa’s bank may not be issuing its own cryptocurrency anytime soon, the bank has been discussing regulations for bitcoin.

As a result, SARB are reported to be having discussions with blockchain-based solutions provider Bankymoon. According to a report, the central bank and Bankymoon are to undertake an experiment to test regulations for the digital currency.

Both, however, are in the early stages of seeing where the partnership can go.

Loerien Gamaroff, CEO of Bankymoon, 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, though, that it will give a formal foundation to bitcoin, which 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.”

The bank has, in the past, expressed its interest in blockchain and digital currencies. So much so, that the bank’s governor stated that it was willing to consider the benefits that the technology could 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.”

Taking Small Steps

It remains to be seen what’s next for the central bank. However, the bank has already made significant progress so far. The fact that it has started proceedings into the regulation of digital currencies is a step forward. Nothing is going to happen overnight, but these steps remain positive for the country, which is seeing an increasing number of people using bitcoin for day-to-day purchases.

Featured image from Shutterstock.