The South African Reserve Bank has sent out guidelines to banks operating in the country regarding their dealings with crypto service providers.
The apex bank has encouraged banks not to cut off all ties with cryptocurrency, telling them that doing so may pose a “threat” to financial integrity. According to the bank, such an act could also lead to greater risks in the long run.
Banks Fear Regulatory Uncertainties And High Risk In Crypto Dealings
Chief Executive Officer of Prudential Authority Reserve Bank of South Africa, Fundi Tshazibana, signed the official notice. He stated that the risk assessment of banks shouldn’t warrant the complete dropping of cryptocurrency entirely.
Many banks cut ties with crypto asset service providers (CASPs) because of higher risks and unclear regulations.
But Tshazibana has stated that risk assessment does not mean that the institution should avoid risks entirely when it comes to dealing with these providers. He added that such issues could even lead to higher risks and a threat to financial integrity. According to Tshazibana, the action to cut ties with crypto can limit the possibilities of dealing with issues like money laundering.
Late last month, the Reserve Bank released a document assessing the level of risk within the local banking sector. The report noted that crypto assets were among the top 10 threats identified by the top local banks.
Before the report, the South African government outlined a plan that clarifies cryptocurrencies as financial assets to enable regulators to carry out their activities. The law on their classification will be released and implemented within the next 12 months.
The Country’s Crypto Community Is Excited About The Notice
Following the announcement, crypto exchanges in the country were excited and optimistic about the proposed arrangement. Many believe that the initiative will increase the level of crypto adoption in South Africa. But banks have been particularly indifferent and reluctant to recognize crypto service providers when doing business.
Some of them have out rightly refused to have any dealings with the providers. The country’s crypto community has expanded in recent times, and bank customers are increasingly making demands to provide a safe environment to trade cryptocurrencies.
South Africa is already hosting several Bitcoin projects, including Untravel Surf Travel, a pro-crypto travel company, and Bitcoin Ekasi, a township that legalized Bitcoin as a way of improving the financial independence of the communities.
