South Africa is slipping behind on regulating bitcoin — Vinny Lingham

Silicon Valley based SA entrepreneur Vinny Lingham says South Africa is falling behind when it comes to regulating bitcoin.

“I think we’re definitely behind the times. I mean Japan has just removed taxes on bitcoin yesterday. Singapore’s regulating it more, Australia etc as well. All these countries in the world are being very progressive on cryptocurrencies and whatever else and South Africa hasn’t issued any guidance on it yet,” said Lingham, in a Skype call with Ventureburn yesterday.

Lingham is the CEO of Civic which makes use of bitcoin and deploys cryptographic keys to allow for the secure storage of information on mobile phones or other devices.

He said the Reserve Bank could treat cryptocurrency as foreign exchange, by having certain caps in place.

“I’m sure those concerns are there, we just need regulators to focus on making sure they understand what’s going on and how the rest of the world is responding, as opposed to saying ‘well it doesn’t conform to our view of the world and therefore we shouldn’t do anything about it’,” said Lingham.

‘We just need regulators to focus on making sure they understand what’s going on’

ICO raised $33-million

Commenting on Civic’s first Bitcoin Initial Coin Offering (ICO) the company held on June 21 to 28, Lingham said the company sold thousands of tokens and raised $33-million. Bitcoin is currently trading at over $2 500 a bitcoin.

“There was basically at one point 50 000 people waiting in line trying to buy tokens from us. So it was quite a successful outcome,” said Lingham, adding that proceeds from the sale will count as revenue.

He said the final numbers must still be audited but he estimates about 10 000 people took part in the sale.

Civic has created 1 billion tokens, of which 33% were made available for sale on June 21. A further 33% will be given away to companies and users, while the remaining 33% will remain with Civic.

“If you look what’s happening in the whole cryptocurrency space right now ICOs and token sales have become quite the rage,” he added.

Lingham prefers to refer to the sale as a token sale, rather than an ICO. “An ICO is more when you issue a crypto coin. We actually did a token which sat just at the back of a bitcoin blockchain.”

To guard against any potential abuse from bitcoin holders, no one investee owns more than the equivalent of one percent of the network.

Help launch network

Lingham said the idea now is to build up a marketplace so that companies can connect to one another using the marketplace, adding that those who buy into the network are people who want to contribute to the network, typically through for example partnership deals.

“So for example if a bank has information on you and you want to open up an account at a telco, the bank can validate who you are digitally using your phone. The telco can accept that information from the bank and you wouldn’t have to go through a process like Fica or Rica (South African financial and cellphone regulations, respectively) because the bank has already done that for you.

“So you’re making that process reusable from one entity to another and then the bank needs to pay the smaller fee and they can monetise the information that you have just transferred across to the bank,” he said.

Pending announcement

He said Civic is available worldwide and that a number of organisations are signing up. “We’ve got a few running right now, but we’ve got a few big ones coming up.”

Civic will in the next week or two make a full announcement on what major clients have signed up, he said, adding that currently the number of end-users is approaching 100 000.

Lingham said Civic, which launched last year and has so far received $5.75-million in seed funding, has hired two or three developers in Cape Town who are working remotely, following an announcement the company made in May that it would open a South African development office.

Read more: Exclusive: Vinny Lingham to open Civic office in SA following IP rule changes