The South African Reserve Bank (SARB) has instructed the nation’s banking institutions to assist clients conducting bitcoin transactions.
In guidance, the bank indicated that institutions should not impose a blanket ban on cryptocurrencies, but urged banks to exercise caution when dealing with such customers.
This comes after certain banks in the nation decided to shut cryptocurrency-related customer accounts, alleging a lack of effective rules governing the industry.
“Banks may operate as a conduit for money tied to crypto asset service provider activity and may play a role in clients desiring to acquire crypto assets or receive fiat currency payouts for the selling of crypto assets into their bank accounts. SARB said that banks must preserve appropriate records for all client transactions, including fiat-to-fiat, fiat-to-cryptocurrency, and crypto-to-fiat transactions.
Moreover, banks have closed cryptocurrency-linked accounts owing to increased risk exposure. However, the SARB stated that there are dangers associated with the crypto market, and that financial institutions must perform a thorough examination.
According to the regulator, risk assessment does not always indicate that institutions should attempt to eliminate all risk. The SARB stressed the need for banks to exercise due diligence in regards to money laundering and internal controls.
Notably, a few of domestic banks have prohibited clients from using credit and debit cards to acquire cryptocurrency on overseas exchanges.
It is noteworthy that South Africa accounts for a sizeable proportion of crypto investors, drawing a variety of market-dominating businesses.
Positive regulatory stance towards crypto
At the same time, authorities have maintained a welcoming stance towards cryptocurrencies while investigating the sector’s use cases. According to Finbold, the deputy governor of the South African Reserve Bank (SARB), Kuben Naidoo, has affirmed that the government would soon implement cryptocurrency legislation that will partially assist the industry and integrate it into the financial system.
In addition, the SARB and the Intergovernmental Fintech Working Group have conducted a proof-of-concept study evaluating the legislative and regulatory implications of implementing distributed ledger technology (DLT).