The call for Bitcoin Regulation

Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us….”

In a climate characterized by the exponential growth in technological innovations resulting in the world moving into the cyber space, the development of digital money was almost inevitable as money evolves with time. History has shown us that money can be anything that enough people agree to trade with and it often reflects the progressive nature of our societies. Hence the construct of money has been expressed in the form of salt, farm animals, gold and diamonds. Then paper money was developed, which remains the most basic form of currency to date. But overtime, it has been supplemented by innovations such as credit-cards, E-money, Paypal and the like. Unlike these innovations, whose function is mainly rooted in the value of fiat currency, Bitcoin is so radical because with enough acceptance, it could eventually substitute fiat currency and become the preferred medium of exchange.

Bitcoin is essentially an encrypted computer file. It was introduced by a programmer known as Satoshi Nakamoto in 2008. Proponents of the crypto-currency argue that Bitcoin is the link between currency and the inevitable technological advancements that the world is subjected to and like every other innovation that initially scared people and brought about skepticism, such as social media platforms, online shopping and online banking etc, the world will catch on and the introduction of a regulatory framework will make the process of “catching on faster and safer”. But before we even divulge in the regulation of Bitcoin, the crypro-currency must first be classified.

Thus far, the classification of Bitcoin remains contentious. Bitcoin has been classified as a commodity since it has similarities with gold, and because of its volatility, it has been regarded as a type of speculative investment. Some jurisdictions classify it as a store of value or an alternative method of payment. Further, the US court in SEC v Shavers explained the function of Bitcoin as an Investment and how it can be used “as money”. Be that as it may, Bitcoin cannot operate in the above classes without any friction. Further, overburdening the Bitcoin Industry with various regulatory frameworks may bring about more anarchy and uncertainty. Hence, it has been suggested by experts in International Banking law that Bitcoin should be classified as a unique asset. Doing so, will not only ensure that Bitcoin is adequately regulated but it will also ensure that participants can realise the optimum benefits offered by the Bitcoin ecosystem with minimum exposure to risk.

Currently, participants in the Bitcoin ecosystem, are subjected to many risks, most of which are inherent in the design of Bitcoin. These risks include price instability to an extent that Bitcoin’s price could plummet from US$17.00 to $0.001 within a few hours. Further, the anonymity provided by the system has proven to attract a lot of criminals. Hence Bitcoin has been associated with crimes such as money laundering, financing of terrorist activities and drug trufficking. Most notably, the Bitcoin ecosystem does not offer adequate protection to its consumers. For instance, Bitcoin consumers are susceptible to security breaches with no recourse, transactions are not reversible, and there are no deposit insurance mechanisms in place to compensate consumers in instances of loss. This means that lost Bitcoins cannot be traced or recovered.

Proponents of Bitcoin argue that the benefits of Bitcoin outweigh the risks; Bitcoin transactions are cheaper and faster since Bitcoin is a peer to peer network, eliminating costly intermediaries and offering participants absolute control of their “currency”. Further, the Bitcoin network is easily accessible because it only requires an internet connection to operate. Unlike fiat currency, Bitcoin has no jurisdictional boundaries, it is independent of any government, and therefore it is not subject to any political influence or monetary policies. Despite its volatility, Bitcoin has proven to be a good investment for most.

In South Africa, the Finance department has made it clear that neither The SARB, the National Treasury nor the  Financial Services Board regulate Bitcoin. A position paper on Virtual Currency was issued in 2014 to this effect. However, the then  Minister of Finance, Melusi Gigaba assured the people of South Africa that the finance department  would continue to monitor and come up with ideas on how to regulate the use of VCs. Following this, in December 2016, a committee tasked with monitoring developments of VCs in SA was constituted and suggestions were put forward regarding adopting an industry-based-approach to the regulation of VCs. In 2017, the SARB made an announcement that it is working with a company called Bankymoon, specialising in Blockchain solution, in order to find the best regulatory framework for the operation of VCs in South Africa. In the same year, the SARB released another statement which expressed a possibility of developing a digital currency, most likely using Distributed Ledger Technology (DLT) and in the beginning of 2019, an announcement was made in which members of the public were requested to suggest ways in which Virtual Currency can be regulated In the country.

Despite the lack of regulation, Bitcoin is growing in SA. This is evidenced by the increase in the number of Exchanges (Luno and ICE X being the largest Exchanges), more merchants, approximately 153, accept Bitcoin, including Takealot, Earth Child and eBay. Furthermore, there has been a multiple of Bitcoin conferences hosted in the country and most notably a Bitcoin ATM was installed in Midrand. This growth should encourage regulators to come up with a framework for Bitcoin and other VCs.

With adequate and effective regulation, Bitcoin could be accepted by a majority of service providers worldwide, and facilitate day-to-day trade. Regulated Bitcoin can also be used to create job opportunities through the process of mining and minimize the risks that consumers are exposed to. Furthermore, Bitcoin has the potential to promote inclusivity by encouraging micropayments in developing countries and reducing the trade friction amongst them. If globally regulated, Bitcoin could become a global trading instrument.

Customary Marriages in South Africa

One of the most widely interpreted and misunderstood Acts in South Africa in my opinion has to be the Recognition of Customary Marriages Act 120 of 1998. This Act provides for the proper governance and procedural structure of the customary law marriages.

Even after years of its promulgation, there is still majority of people living in South Africa being negatively affected by entering into a customary law marriage.

This article provides for the interpretation of the aforementioned Act, case law dealing with the institution of customary law marriages as well as the public opinion around the perception of what constitutes as a valid customary law marriage.

CUSTOMARY MARRIAGES IN SOUTH AFRICA

Section 3(1) of the Recognition of Customary Law Marriages Act 120 of 1998

The understanding of the procedure, stems from the principle of the Act that which deals with the requirements of entering into a valid customary marriage.

However, before we get into the requirements we should first deal with the definition of what customary marriages are. A customary marriage is understood as being entered into in accordance with the traditions and customs of indigenous African customary law.

Section 3(1) of the Act deals with the requirements of entering into a valid customary law marriage and explains it as follows:

  1. The marriage must be negotiated, and entered into or celebrated in accordance with customary law;
  2. The marriage must be entered into in line with the traditions and customs of the parties involved;
  3. The parties involved must be 18 years or older, and if not then consent is required from the minors parent or guardian;
  4. The parties must be competent to marry each other, i.e must not be blood relatives;
  5. Both the parties must consent
  6. The marriage must be lawful.

According to public perception it is a prerequisite for the man getting married to provide lobola or magadi to the woman’s family, or that lobola be exchanged between the parties involved. However we can make out from the above requirements that this is not the case.

SENGADI V TSAMBO (40344/2018) [2018] ZAGPJHC 613 (3 NOVEMBER 2018)

A recent and very popular case that had most of the public ranting was the case of Hip Hop Artist’s wife being restricted from attending and being involved in the funeral arrangements of her late husband married in terms of customary law.

The restrictions were made by the deceased’s family in that alleging that she was not their sons lawful wife in terms with customs and tradition and as a result should be banned from the proceedings as she did  not have  a claim to the deceased’s body or home.

The urgent application to the High Court.

The Applicant/Plaintiff in the above case, Lerato Sengadi, alleges in an affidavit to how her customary marriage to the deceased had been entered into. She makes reference to the deceased, Jabulani Tsambo also known as HHP (stage name), proposing to her and her accepting the marriage proposal. She makes reference to the Tsambo family writing a letter to discuss lobola negations with her family, as this is tradition and custom. The Tsambo family attended the negotiations days later and agreed upon a bride price/lobola to the amount of R45 000 .00. The deceased deposited R30 000.00 into the Applicant’s mothers account and promised to pay the outstanding amount in two instalments.

She further alleges that on the day of the negotiations the two families celebrated as per custom and tradition.

In closing she confirms that according to the Act, and customs she and the deceased entered into validate a lawful customary marriage.

The court agreed and declared that they had been in a valid customary marriage and thus she is entitled to be treated and seen as such by the deceased’s family.

It was submitted that the Applicant was wronged by the Respondents, whom are the deceased’s father and uncle, and they must therefore allow the Applicant to prepare her deceased’s husband funeral as she she’s fit.

This was a very interesting case since the public was convinced that Lerato Sengadi could not be recognized as the lawful wife since her deceased husband failed to pay the outstanding amount of lobola.

As much as it is custom, lobola does not regard a customary marriage valid or invalid.

The court also made reference to the fact that should a “husband” pay his “wife’s” bride price and a celebration in terms of custom and/or tradition not take place. Then the “husband” and wife” move into their “marital” home, this will merely be regarded as cohabitation and not a valid customary marriage.

Therefore what we tend to forget or ignore is that the validity of a customary marriage depends on the negotiation and celebration of the two families at the time of institution.

It is common cause to understand the effects of customary marriage before entering into it, as this will affect the termination thereof either through death or divorce.

Therefore moving forward it is imperative for these requirements and more like them to be interpreted in such a way as to make reference to each custom and culture individually and not generalize or blanket the issue of customary marriage to one meaning.