Is International Pressures Forcing South African Banks to Close Crypto Exchange Accounts?

  • Nedbank could close crypto bank accounts like First National Bank did last year
  • If not closing the accounts, the bank may not onboard any new crypto-related businesses

The big-four bank, Nedbank, may become the latest financial institution in South Africa to close cryptocurrency bank accounts, reports the local media channel.

The bank will be following in the footsteps of the First National Bank (FNB) that closed the digital currency-related bank accounts back in November, last year citing lack of regulations as the reason behind its move.

Now the Nedbank is planning to do the same as the bank responded to the related queries with,

“Nedbank is in the process of assessing its position in respect of virtual currency dealers/traders.”

The bank, however, did not elaborate on the latest development.

Last year, after FNB notified South African crypto dealer that it will close the accounts of crypto exchanges this year, reports emerged that FNB was pressured by its “correspondent bank” JPMorgan to close the crypto accounts. JPMorgan did not comment on the issue.

Barclays is another point bank that said in August last year that it no longer provides banking services to US-based crypto exchange Coinbase.

Bank may not onboard any new crypto-related businesses

Local crypto exchanges, however, haven’t experienced anything of this regard as Richart De Sousa of AltCoinTrader says,

“Nedbank has not consulted with AltCoinTrader regarding the closure of our Nedbank account. We enjoy a good working relationship with Nedbank.”

Farzam Ehsani, co-founder of local crypto exchange VALR also said that the bank has given “no indication that they plan on closing crypto accounts.”

However, the word on the street is that the bank is evaluating its position and may not onboard any crypto-related businesses in the future. De Sousa said:

“Should Nedbank close accounts of crypto businesses, it will further alienate and possibly scare many that are sitting on the fence with crypto-currencies. Having said that, it would also send a message to the crypto industry that banks are threatened by disruptive technology and they will have to defend their position.”

Lack of knowledge driving the banks

Nedbank he said has been very cautious when dealing with digital currency companies and belives the absence of any regulation in the crypto sector might be an actor behind the bank’s decision to close crypto-related bank accounts. He said:

“The Crypto Asset Regulatory Working Group is working around the clock to address the much-needed regulation. There may also be international pressure contributing to the closure of accounts as banks may want to slow down the adoption so they can get on board.”

De Sousa, however, wants bans lifted and regulators to embrace blockchain and crypto assets and instead of focusing on its negatives, see it as a “new way to uplift the largely unbanked population.”

Even FNB has “clearly indicated” that it will “revise this decision once there is some clarity from the regulators,” and Ehsani expects the FNB to “reverse this decision in the foreseeable future.”

The fact that Bank does not have a good understanding of crypto is the main issue and De Susa belives down the line they will offer cryptos to its customers “without exception.” Marius Reitz, general manager for Africa at Luno said:

“Crypto-currencies are still very new and this is not a unique situation to South Africa as regulation continues to be shaped; it is one of the biggest challenges crypto companies face around the world.”

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