South Africa’s FirstRand Bank Shuts Down Bitcoin Exchanges Accounts Due To Regulatory Uncertainty

FNB Bank, which is one of the ‘big five’ South African banks, has decided to shut down accounts owned by crypto exchanges in the country. However, the bank was quick to note that should the country implement clear-cut cryptocurrency regulations, it might reverse the policy.

In a letter seen by South African media firm MyBroadband, FNB presented its decision to stop offering banking services to crypto related businesses and exchanges in the country. Here is an excerpt from the letter:

“FirstRand Bank has been considering its risk appetite in respect of virtual currencies and virtual currency exchanges for some time. Within this context the bank has taken the decision to discontinue the provision of banking services to virtual currency exchanges and/or entities dealing/trading in virtual currency.”

One of the crypto exchanges in South Africa, Luno, also confirmed the announcement and stated that FNB is set to close down the account belonging to Luno, and those of other exchanges at the end of first quarter of 2020.

1) We can confirm that FNB has proposed to close our account with effect from the 2nd quarter of 2020, along with other #crypto exchanges in SA.

For further information and answers to FAQs, read our blog below ⤵️https://t.co/3UtfXpnJ0C

— Luno (@lunomoney) November 20, 2019

No Impact on Existing Customers

Through its General Manager for Africa Marius Reitz, Luno confirmed that they do not expect any impact on their existing clients as they have other existing banking relationships to facilitate deposits and withdrawals on the platform.

Reitz noted that as long as formal regulations are lacking, banks would continue to reconsider their exposure to digital currencies. Luno expressed its commitment to collaborating with the SA Reserve Bank as well as with other regulatory authorities to ensure they are well equipped to adopt the change to their financial infrastructure. Reitz said,

“We need to remember that cryptocurrencies are very new and so this move is not unique to SA while regulation across the globe continues to be shaped; it is one of the biggest challenges crypto companies face globally.”

Absence of Formal Crypto Regulations

According to the letter, the absence of clearer crypto regulations in South Africa informed the decision taken by FNB to close down crypto related accounts. Apart from the law regarding taxation, the government of South Africa is yet to ratify regulatory policies that govern the digital currency business in the country.

All the same, the issue of traditional banks pulling out their services from crypto businesses is not restricted to South Africa. A similar move is witnessed in India, where the country’s central bank bars regular banks from accepting crypto exchanges as clients.

In the U.K., Barclays bank equally terminated its collaboration with the US-based crypto exchange Coinbase.