The ‘crypto’ sector has been celebrating Donald Trump’s election and inauguration as the United States president, but according to South Africa’s central bank governor, the sector’s heightened influence in American politics amounts to regulatory capture.
South African Reserve Bank (SARB) Lesetja Kganyago recently shared the stage with ‘crypto’ executives at the World Economic Forum (WEF) in Davos, Switzerland, where the new era of digital assets under the Trump administration took center stage. Coinbase (NASDAQ: COIN) CEO Brian Armstrong praised the new president for supporting the sector, while former White House official Anthony Scaramucci opined that the Democrats’ anti-crypto stance ultimately cost them the election.
Amid all the celebration, Kganyago cautioned that the ‘crypto’ sector’s high influence in the election, where it poured nearly $250 million last year, had an ulterior motive: regulatory capture.
“What we need is a society that frames conversations about how policies should evolve such that regulations are clear for everyone across industries. If regulations are to be established through the power of money, then we have a problem,” he told the audience.
Indeed, ‘crypto bros‘ spared no expense in pushing their agenda in the last U.S. election. Beyond rallying for Trump to get over the line against “the anti-crypto” Kamala Harris, dozens of crypto firms spent millions to elect pro-crypto state leaders.
The biggest crypto PAC was Fairshake, whose primary funders include Coinbase, Ripple, and Andreessen Horowitz, who have all faced regulatory scrutiny under the Biden administration. Ripple has been in a four-year legal battle with the SEC, while Coinbase was only beginning its legal dispute before ex-Chairman Gary Gensler was ousted. Horowitz has invested in several crypto firms that were in regulatory cross-hairs under the previous administration; nearly all the regulatory actions against these firms will be swept under the rug by the Trump government.
Beyond the pro-crypto regulations, Trump is expected to push for a national BTC strategic reserve. Armstrong is (unsurprisingly) in full support of the reserve, telling the audience that “BTC is, essentially, the new gold standard.”
Kganyago disagreed and noted that the SARB has no intention to establish a BTC reserve.
“I would have a significant problem with a lobby that says governments should hold this asset or hold that asset…If we now say ok, bitcoins…what about platinum? What about coal? Why don’t we hold strategic beef reserves, or mutton reserves, or apple reserves? Why Bitcoin?”
Kganyago, who has led the SARB since 2014, further cautioned governments against being bullied “by an industry with a particular interest in a particular product, which imposes it on society and says that the society must hold it.”
South Africa has been leading in digital asset regulations on the continent, having issued nearly 250 licenses to virtual asset service providers (VASPs) in 2024.
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