Home Technology South Africa’s central bank allows local banks to serve crypto customers

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

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

The South African Reserve Bank (SARB) led financial institutions in the country to serve customers cryptocurrency transactions.

In a guidelinethe bank said institutions should not impose a blanket ban on cryptocurrency, but called on banks to exercise due diligence when dealing with such customers.

This comes after some banks in the country decided to shut down customer accounts associated with cryptocurrencies, citing a lack of proper regulation to govern the sector.

“Banks can act as a conduit for funds related to the activity of crypto asset service providers and can play a role in customers wishing to purchase crypto assets or receive payments for the sale of crypto assets through a currency fiduciary on their bank accounts. Banks must ensure that they maintain adequate records regarding all customer transactions, including fiat-to-fiat, fiat-to-crypto and crypto-to-fiat transactions,” the SARB said.

Manage cryptographic risks internally

Additionally, banks had closed crypto-linked accounts due to greater risk exposure. However, the SARB has acknowledged that risks exist in the crypto market, but financial institutions should conduct a full assessment.

According to the regulator, carrying out a risk assessment “does not necessarily imply that institutions should seek to avoid risks altogether”. The SARB has emphasized bank due diligence on money laundering and internal controls.

Notably, several banks in the country had banned customers from using their credit and debit cards to buy crypto in overseas markets.

It is worth mentioning that South Africa accounts for a large share of crypto investors, attracting various players seeking to dominate the market.

The Regulator’s Friendly Stance Towards Crypto

At the same time, regulators have maintained a user-friendly approach to cryptocurrencies by exploring industry use cases. As reported by Finbold, SARB Deputy Governor Kuben Naidoo confirmed that the country is set to deploy cryptocurrency regulation that will partly support the sector and integrate it into the financial space.

In addition, the SARB and the intergovernmental fintech working group completed a joint proof-of-concept project explore the policy and regulatory implications of introducing distributed ledger technology (DLT).

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