South African Reserve Bank Governor Lesetja Kganyago has strongly criticized the idea of governments including Bitcoin in their strategic reserves, likening it to holding reserves in coal or mutton.
Speaking on Tuesday at the World Economic Forum (WEF) in Davos, Kganyago dismissed Bitcoin as lacking historical value and strategic significance compared to traditional assets like gold.
Kganyago warned against lobbyists advocating for Bitcoin as a national reserve asset, stating, “There is a history to gold, but if we now say Bitcoin, then what about platinum or coal?
Why don’t we hold strategic beef reserves, or mutton reserves, or apple reserves? Why Bitcoin?” His comments, reported by TechCentral, emphasized the need for governments to align asset reserves with strategic intent rather than succumbing to speculative trends.
The remarks follow recent statements by former U.S. President Donald Trump endorsing Bitcoin as a strategic asset. Trump proposed creating a U.S. Bitcoin reserve, citing its potential to enhance economic stability and positioning it as a modern counterpart to gold in the country’s strategic stockpile.
Strategic reserves are essential resources that governments maintain to navigate crises such as natural disasters, wars, or economic disruptions. While gold has historically been a cornerstone of such reserves, the suggestion to include Bitcoin has sparked heated debates among policymakers and financial experts.
Coinbase CEO Brian Armstrong, who was on the same WEF panel as Kganyago, countered the governor’s stance, arguing that Bitcoin surpasses gold as a store of value. “Bitcoin has higher utility and has been the best-performing asset of the last 10 years.
It’s scarce, portable, and divisible. Over time, it could start as just 1% of reserves and eventually surpass gold in importance,” Armstrong asserted.
Despite its growing popularity, South Africa has maintained a cautious approach to cryptocurrencies. In 2022, the Financial Sector Conduct Authority (FSCA) classified crypto assets as financial products under the Financial Advisory and Intermediary Services (FAIS) Act, bringing them under financial regulations.
However, the country lacks a comprehensive legal framework for cryptocurrency, reflecting the cautious stance of its regulators.
Kganyago’s comments highlight the tension between emerging technologies and traditional financial governance, as nations grapple with whether to embrace or regulate digital assets.
While proponents like Armstrong see Bitcoin as the future of strategic reserves, skeptics like Kganyago remain unconvinced, viewing it as speculative and incompatible with the stability required for national reserves.
The debate over Bitcoin’s place in national reserves signals a broader question: will cryptocurrencies redefine financial strategy, or remain on the fringes of traditional economic frameworks?
