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South Africa’s central bank grants permission to local banks to serve crypto customers

The South African Reserve Bank (SARB) has directed financial institutions in the country to serve customers who handle cryptocurrency transactions.

In a guideline, the bank stated that institutions should not impose a blanket ban on cryptocurrencies, but called on banks to exercise due diligence when dealing with such customers.

This comes after some banks in the country decided to close customer accounts linked to cryptocurrency, citing the lack of proper regulations to govern the sector.

“Banks may act as a conduit for funds associated with the activity of crypto asset service providers and may play a role in customers wishing to purchase crypto assets or receive payments for the sale of crypto assets via fiat currency in their bank accounts. Banks should ensure that they maintain adequate records regarding all customer transactions, Including paper, paper, crypto and crypto transactions.”

Manage crypto risk internally

Moreover, banks have closed accounts linked to cryptocurrency due to increased exposure to risk. However, the SARB acknowledged that there are risks in the crypto market, but financial institutions should make a thorough assessment.

According to the regulator, conducting a risk assessment “does not necessarily mean that organizations should seek to avoid risk completely.” The SARB emphasized banks performing due diligence on money laundering and internal controls.

Notably, many banks in the country have banned customers from using their credit and debit cards to purchase cryptocurrencies on foreign exchanges.

It is worth noting that South Africa accounts for a large share of cryptocurrency investors, which attracts diverse players seeking to dominate the market.

The regulator’s friendly attitude towards coding

At the same time, regulators have endorsed a crypto-friendly approach to exploring the sector’s use cases. As Feinbold reported, SARB Deputy Governor Kobin Naidoo confirmed that the country is ready to roll out crypto regulations that will partially support the sector and integrate it into the financial sphere.

Furthermore, the Council and the Intergovernmental Working Group on FinTech completed a joint proof-of-concept project exploring the policy and regulatory implications of introducing distributed ledger technology.

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