South Africa's First National Bank (FNB), one of South Africa's "big five banks," is closing bank accounts established by the country's cryptocurrency exchange. At the same time, the bank also said that the emergence of clear cryptocurrency regulations in South Africa may trigger a reversal of the policy.
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FNB calls for clearer regulations in South Africa
In a letter quoted by MyBroadband, the South African tech news platform, FNB conveyed its decision to stop providing services to cryptocurrency exchanges. Part of the letter is:
FNB has been considering its risk appetite for virtual currency and virtual currency exchanges. In this case, the bank has decided to stop providing banking services to the virtual currency exchange and/or the virtual currency trading/transaction entity.
Luno, the popular African cryptocurrency trading service, also confirmed the news. Luno Africa general manager Marius Reitz said FNB will close the exchange's account at the end of the first quarter of 2020.
According to FNB, the decision was due to the lack of formal cryptocurrency regulations in South Africa. In addition to tax laws, the South African government has not yet established any regulatory policies to manage virtual currency transactions in South Africa.
Banks that cancel services to cryptocurrency exchanges are not limited to South Africa. In India, the country's central bank prohibits commercial banks from treating cryptocurrency exchanges as customers.
In the UK, Barclays also terminated its partnership with the US cryptocurrency giant Coinbase in August 2019.
Encrypted exchanges indicate that operations remain unaffected
In response to this news, another South African cryptocurrency trading platform, VALR, announced that this would not adversely affect its operations. The exchange also revealed that it is in contact with FNB to ensure a smooth transition.
Other major banks in South Africa have not adopted a similar policy. A spokesperson for VALR announced that the exchanges between the two parties are full of hope and that FNB's decision will eventually become an isolated incident.
The bank itself also stated in a letter to the cryptocurrency client that if the regulator introduced a strict regulatory policy on cryptocurrencies, it would revise its decision.
As previously reported, Bitcoin is still very popular in South Africa, in part because of the lack of strict government regulations. According to data provided by Google Trends, the country ranks second in terms of global Bitcoin search interest, second only to Nigeria.