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Bitcoin is Similar to Gold and Represents a Very Good Store of Value

Interview with PK Daby - Defi Economy

What is the status of the debates and initiatives regarding the introduction of digital currencies or cryptocurrencies in the financial-banking circuit in Mauritius, with the Bank of Mauritius having already announced measures in this direction?


  • A digital currency is a currency issued by a government or central bank in electronic format, this can be processed either by banks directly or via payment intermediaries like PayPalCentral Bank Digital Currencies ("CBDCs") being such an example.

  • Cryptocurrencies, on the other hand, are digital assets that require a decentralized blockchain to be transferred from one individual to another. These digital assets do not need a legal body to be bought or sold, such an example being Bitcoin.

You can acquire Bitcoin without the permission of a legal body, while on the other hand, you must be authorized by a regulator to transact with CBDCs.

There is some regulation at the level of the Financial Services Commission ("FSC") through the Virtual Asset and Initial Token Offering Act of 2001, but local implementation has not kept pace with the development of the overall cryptocurrency industry.

What level of understanding of cryptocurrency and its usefulness, or not, has been reached in Mauritius?

Unfortunately, Mauritius is still at the level where the overwhelming majority view cryptocurrencies as a novelty gadget at best or a dubious speculative asset at worst.

On the minority side, there are currently two major schools of thought on the utility of cryptocurrencies from a Mauritian perspective: technology as a driver of innovation and cryptocurrencies as the future of finance.

Startups in the development of cryptocurrency raised a staggering $33 billion in 2022 and over $10 billion in 2023, and 2024 is going to be a record year with the implementation of Bitcoin ETFs in the United States.

If Mauritius were to take the necessary steps to become a hub for the development of cryptocurrency technology or a financial hub for cryptocurrency, a mere fragment of these flows would be enough to significantly increase Foreign Direct Investment ("FDI") thus contributing to the revival of the Mauritian economy.

What are the conditions that could favour cryptocurrency investment in Mauritius?

The short answer is licensing and banking, of course while ensuring that the guidelines are well defined and adhered to.

The marketing of the Mauritian legislative framework in relation to cryptocurrency has been very effective, attracting many very influential players in the industry over the years. But in the absence of operational implementation support, many have left or simply decided to turn to more proactive jurisdictions such as Dubai or Singapore.

Even Hong Kong, which banned cryptocurrencies following Chinese government directives 5 years ago, backtracked last year. This is at the behest of the same Chinese government that obliges regulators to issue licenses and banks to serve license holders.

Overall, what is the position of the financial and banking community on this monetary innovation, given that there are no official documents on such a project to date?

Mauritius has one of the highest degrees of operational regulatory compliance in the world.

The rigidity with which our administrators operate in the financial sector is why we are the most trusted country in Africa and why large companies and HNWIs (high net worth individuals) from all over the world come here to manage their treasury and their wealth.

However, this rigidity is also a double-edged sword that creates an atmosphere where it is very difficult to innovate without rules set in stone: we have legislation for cryptocurrencies, but we have an absence of guidelines from regulators.

As such, the general position in the financial and banking sector is that they will not deal with cryptocurrency or cryptocurrency companies without any clear guidelines from the BOM and the FSC.

What do you think are the most important aspects of cryptocurrency issuance, especially in terms of regulations to reassure financial stability and avoid scams, such as the hacking on the Japanese exchange platform Coin Check?

First of all, hacking isn't just a cryptocurrency problem. Last year alone, more than 3,200 security breaches were recorded by U.S.-listed companies with more than 340 million confirmed victims, and no one is pushing to shut down the internet. Cryptocurrency hacking is very accentuated because we tend to be more and more critical of new technologies.

However, the cause of these cryptocurrency-related scams is often the same: the use of clandestine operators or as they are known in the industry, cowboy exchange sites.

But to be constructive on this issue, if the average Mauritian investor was able to access cryptocurrencies from regulated institutional brokers that have the proper custody infrastructure, it would decrease the affluence of these cowboy exchange sites and the fallout from the hacking incidents.

The sooner regulators allow Mauritian financial operators to serve Mauritian investors, the smaller the problem of hacking and scamming will be.


To what extent can cryptocurrency be at the service of the economy of Mauritius and its financial and banking sector? 

To reiterate my previous point, cryptocurrencies are part of the future of finance.

As an island nation, we have a lot to gain by innovating and moving faster than larger, less agile countries.

We could issue licenses to cryptocurrency companies that would require them to hire locally, creating the high-paying jobs for Mauritians seeking opportunities in this sector.

We could grant residence permits to cryptocurrency investors, which would indirectly increase GDP generated by the service sector. We could facilitate the relocation of the headquarters of the largest cryptocurrency companies to Mauritius, creating a hub that attracts talent from all over the world here, and with it all the financial benefits that come with it.

All this would attract foreign exchange inflows and reverse the depreciation of the rupee, which is accelerating with the increase in consumption of foreign products and the deceleration of exports.

Does the banking industry have a foolproof computer system in place to thwart any attempt by malware, given that cryptocurrencies have become the covetousness of hackers?

No matter how much you invest or how many of the brightest engineers you hire, there will always be vulnerabilities, that's Murphy's Law.

The best strategy we can adopt in Mauritius is to design a system that channels all cryptocurrency transactions into a sandbox environment where all fallout will be contained.

For example, if all cryptocurrency transactions were routed through designated non-systemic banks, which only served designated operators, which in turn provided full live transparency to regulators, there would be no need to revamp banking cybersecurity systems.

These designated banks would enjoy a commercial advantage over the big banks, but in return, would isolate the risks of economic contagion if the cryptocurrency sector were to implode thus allowing Mauritius to participate in this new industry, without affecting the traditional economy.

Wouldn't the fact that cryptocurrencies are beyond the control of states and central banks be an unfavourable factor for their development?

Although we have used the term cryptocurrency throughout this interview, the term itself is a 'misnomer', a word that has a misleading name or designation itself.

The correct description to use would be digital assets, as the main use is speculative and not transactive.

Taking Bitcoin as an example, the average or institutional investor buys it to speculate on the price, not to go shopping in supermarkets.

Digital assets are not a competitor to central bank currencies, they are a competitor to traditional assets like stocks, bonds and more specifically gold.

In 5 years, it will be highly likely that public company stocks and bonds will be issued and traded on the blockchain in digital form in the future, and as such, the portfolio of the future will be digital assets and not registrar-based assets.

Is it possible for cryptocurrency to replace national currency? What would happen from the point of view of the banking system and monetary policies? 

No, the adoption of a decentralized cryptocurrency as a national currency is inconceivable from an economist's point of view.

The purpose of monetary policy is to control the velocity of money, and this is exercised mainly by printing money and setting interest rates, which can only be done if you control the issuance of money.

If a country were to adopt Bitcoin as its official currency, the main problem it would face would be that in the event of inflation, it would not be able to raise rates, because to raise rates, the country would have to print the currency to pay the higher rate.

At most, digital assets like Bitcoin have a better place as a reserve currency, next to gold and silver. It's not unlikely that we'll see Bitcoin being included on central banks' balance sheets over the next 10 years.

Is there a real risk of bank disintermediation by cryptocurrencies, as has been the case for example in the field of travel/tourism or music platforms?

Yes, this risk is real, but it is not the biggest risk for disintermediation. As we have seen in China, payment service providers such as WeChat and Alipay are the banking system's biggest competitors. In China, the role of the banking system has long been relegated to that of a settlement system between payment giants, everything is done on payment applications.

Cryptocurrency is there to fill the void that exists between states and supranational organizations that refuse to deal with specific states for political reasons.

Commonly, it is practically impossible to deal with a private individual in Russia for a number of reasons that are far from the fault of the individual.

Cryptocurrency solves this problem by giving the ability to transact on a neutral platform with a neutral unit of payment.


Some scholars have argued that the slow progress of cryptocurrencies, or even their inefficiency - lies in the centralized management of these currencies, in that they are subject to a cumbersome, time-consuming, and expensive transaction validation process?

This statement would be a very good example of what we call a false argumentative premise.

I could show you a penguin as saying: a penguin is a bird, but it can't fly, so birds can't fly.

"Specialists" as you call them are what we call in the cryptocurrency industry, "tourists", they come to sight see but don't spend much time understanding the industry.

Bitcoin is a slow settling blockchain, it takes 10 minutes for a block or transaction lot to settle.

Ethereum is a medium speed blockchain, it takes 15 seconds for a block or transaction lot to be settled. Arbitrum is a fast settlement blockchain (layer 2), it takes 0.26 seconds for a block or transaction lot to be settled.  Using an analogy with commodities, some digital assets are akin to gold and are very good stores of value, Bitcoin being one of them; Some digital assets compare to oil, it must be used to have value, Ethereum being one of them.

There is a huge knowledge gap in relation to cryptocurrency, but it is within this gap that the opportunities lie.



This is not an offer to buy or sell, or a solicitation of any offer to buy or sell any of the investments or assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts, and other forward-looking statements, which do not reflect actual results. Information provided by third-party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. Any opinions, projections, forecasts, and forward-looking statements presented herein are valid as of the date of this communication and are subject to change without notice. The information herein represents the opinion of the author(s), but not necessarily those of Stewards Investment Capital Ltd.

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