Cryptocurrency has attracted mainstream attention in 2017, which has resulted in significant growth in trade volumes and token values.
In 2017 the South African Reserve Bank (Sarb) had started testing a number of regulations related to Bitcoin and other cryptocurrencies.
The formal regulations in providing legitimacy to Bitcoin and cryptocurrencies within the local economy would assist in making people on the street comfortable with Bitcoin. With these new regulations, everyday people would trust that Bitcoin is not just for hackers and criminals, reported “BusinessTech”
The financial sector has been witnessing several innovations and disruptions, spurred by virtual currencies. Although virtual currencies like Bitcoin are gaining popularity, the central bank needs to ensure such payment methods are not abused to fund illegal activities like money laundering or terrorism.
Thus for the central bank to issue virtual currencies or crypto-currencies in an open system will be too risky. As regulators still lack a clear understanding of how virtual currencies work. An introduction of a ‘regulatory sandbox’ by the central bank enables businesses that provide virtual currency exchange services to experiment and test new products, reported “ITWeb”.
Virtual currencies, also known as crypto-currencies, are mediums of exchange in cyberspace using cryptography to secure transactions and control the creation of new units. Initially highly controversial, the best known is Bitcoin, though Ethereum and Litecoin are also widely used. Today, there are more than 800 virtual currencies in use around the world.
