The central bank of South Africa allows banks to serve crypto clients

    20 Aug 2022
    50 Views

    The South African Reserve Bank (SARB) warned financial institutions against the “wholesale” ban on customers with digital assets. The regulator said the banks should not “avoid risk entirely” amid the booming economy in the region.

    The South African central bank said that south African financial institutions will now be allowed to deal with funds linked to digital assets and shouldn’t indiscriminately block all crypto clients.

    Banks in the country “may act as a conduit for funds” tied to crypto asset service providers and “may play a role in customers wishing to purchase” or “receive payouts in fiat currency” in their bank accounts for the sale of crypto, the SARB said in new guidelines published this week.

    The guidance was released following some local banks moved to shut down accounts tied to crypto exchanges, citing exposures to risk. In the published document, the SARB said it was aware that certain banks in the country had blocked clients with links to crypto. It added that although thorough risk assessment is necessary, the “wholesale termination of client relationships” poses a threat to financial integrity.

    “Risk assessment does not necessarily imply that institutions should seek to avoid risk entirely,” the SARB said.

    Last June, some banks in South Africa blocked customers from using their credit and debit cards to purchase crypto on foreign exchanges, while the central bank warned existing regulations didn’t allow “for cross-border or foreign exchange transfers for the explicit purpose of purchasing crypto assets.”

    However, South Africans are allowed to use their annual “single discretionary allowance” of up to 1 million South African rands (roughly $59,000) or foreign capital allowance of up to 10 million rands (roughly $580,000) to buy crypto.

    As reported earlier, South Africa looks to introduce a regulatory framework for cryptocurrencies, claimed Kuben Naidoo, Deputy Governor of the South African Reserve Bank (SARB).

    The crypto economy as of late has been developing most rapidly in Africa. It is still the poorest region of the planet, but its economy is booming. In addition, Africa has the highest percentage of unbanked people, which, somewhat counterintuitively, now contributes to their progress, as they immediately start using the services of fintech companies, cryptocurrencies, and DeFi. In a way, the continent today is a cryptocurrency frontier, a region where the population gets used to the cryptocurrency ecosystem in its modern form,

    Leave a Reply

    Your email address will not be published. Required fields are marked *