Democratic Alliance federal chair Helen Zille is bullish about bitcoin but has cautioned against its use as a strategic reserve currency by the state.
Zille was speaking at a cryptocurrency conference, called Adopting Bitcoin, held recently in Cape Town. She said she invests in crypto personally – and every “spare penny” she has goes into crypto investments (not her main savings). She is, however, far more cautious about the cryptocurrency being used as a reserve currency, an idea that has gained favour in the US following the election of Donald Trump as president.
Zille admitted that the adoption of bitcoin as a strategic reserve currency had helped El Salvador reduce its debt significantly – bitcoin has more than doubled in value since the Latin American country invested in the cryptocurrency. One of the key objectives was to de-risk El Salvador’s finances by reducing its dependence on the US dollar.
Zille described the steps taken by El Salvador as “important experiments” but warned that there are many risk factors South Africa’s financial regulators must consider before thinking about making a similar move here.
The South African Reserve Bank defines its strategic reserve as a “collection of assets that are managed to help the country prepare for economic crises, natural disaster and conflict”. These assets include gold, foreign exchange, “special drawing rights” and forex deposits.
Quoting South Africa’s second deputy minister of finance, the DA’s Ashor Sarupen, Zille said: “The scale of debt in South Africa is such that if we use unclassified assets, it could trigger a major increase in the risk premium in the bond market, which in turn could trigger currency issues. While there is scope for the Reserve Bank [and national] treasury to test crypto assets, [we] would not advise it for dealing with our debt because it creates too many risks that would blow up the cost of borrowing and trigger a massive debt recall, which would trigger a currency crisis.”
Manyi on money
Zille explained that this would happen because around 90% of South Africa’s debt is denominated in rand and sold through bond market auctions on a guaranteed yield with specific payment coupons on pre-defined dates.
MK Party chief whip Mzwanele Manyi, who also spoke at the conference, was more bullish about bitcoin’s usefulness in South Africa’s strategic reserves. Citing a rand manipulation case where foreign and local banks were accused of colluding to profit from fluctuations they deliberately caused in the rand, Manyi said bitcoin differs from traditional currencies in that it “operates on principles of transparency, decentralisation and fairness”.
Read: Lesetja Kganyago scoffs at bitcoin as strategic reserve
He said the use of crypto in state affairs would also help fight corruption, saying: “With bitcoin there is no introduction fee or kickback, everything is out there and verifiable. So, if you have any government system that wants to talk about transparency, bitcoin is the way to go.”
Also citing the El Salvador example, Manyi urged the South African government to invest 5% of its strategic reserve in bitcoin, claiming that this amount, some R50-billion by his estimation, could grow to R380-billion in five years – assuming bitcoin’s growth in the past continues on a similar trajectory.
Both Zille and Manyi’s comments follow remarks by Reserve Bank governor Lesetja Kganyago, who warned on a stage at the World Economic Forum in Davos last month that governments should be wary of lobbyists who have a “particular interest in a particular product” and seeking to impose that on societies.
“I would have a significant problem with a lobby that says governments should hold this or that asset without consideration for the strategic intent of government. 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?” asked Kganyago. – © 2025 NewsCentral Media
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