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Central Bank Deputy Governor Criticised for Spreading Misinformation That Harms the Crypto Industry

A South African Professor has accused the South African central bank deputy governor of spreading inaccurate information that does immeasurable damage to the crypto industry.

By Staff

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Steven Boykey Sidley, an author and a professor at a South African university, has criticized Kuben Naidoo, the country’s central bank deputy governor for claiming that 90% of cryptocurrency transactions are illegal.

Sidley called Naidoo’s allegations “balderdash,” insisting that the actual statistics are constantly compiled and presented by several data analytics organizations and indicate that just a small percentage of cryptocurrency transactions are associated with illegal activity.

In his opinion piece published by the Daily Maverick, Sidley accuses the South African Reserve Bank (SARB) deputy governor of spreading misinformation that ends up in news headlines and does immeasurable damage to an important new industry. 

Sidley cites data from Chainalysis, which indicates that about 0.15 percent of cryptocurrency transactions are thought to be connected to illegal behavior, as evidence for this theory. This number, according to Sidley, who is also a co-author of the book “Beyond Bitcoin: Decentralised Finance and the End of Banks,” is far smaller than the amount involved in illegal fiat currency transactions.

In the opinion piece he explains, “Furthermore, the number of transactions tied to illicit transactions in the real world of rands and dollars, where we live, is 5%. That’s 50 times higher than crypto, and those are the only ones we know about.”

The professor added, “Why is this? Because the blockchain’s transactions are public. It is impossible to commit a silent crime. It is instantly visible and tracking the proceeds of crypto crime is simple for anyone. The deputy governor had been woefully misinformed on this matter, and he should have been more cautious.”

Sidley also commented on the South African Reserve Bank’s plans to control cryptocurrencies as financial assets. 

As previously reported, the SARB expects to have a crypto regulatory framework in place by the end of 2023. 

According to Sidley, such a regulatory framework removes the uncertainty that currently afflicts the entire industry and allows institutions like banks to get into this asset and service space.

He also argues that while such a regulatory framework is expected to create some level of certainty, it will expose an even bigger problem that awaits the industry. Also, the regulation of cryptocurrency with laws passed more than a century ago.

He said:

“What the Sarb (and every other regulator) is trying to do is to shoehorn crypto into existing regulations designed many decades ago for assets that are hundreds of years old — stocks, currencies, commodities, collectibles, and the like. It is not going to work.”

Sidley also insisted that these entirely new asset classes need to be defined properly before the whole field can be rationally regulated.


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