The South African Reserve Bank (SARB) is on the verge of implementing new rules regarding the use of digital currencies in a bid to stop them from being used to evade taxes and other currency controls. According to reports in South African newspaper Business Report, SARB deputy governor Kuben Naidoo has expressed a desire to implement rules within the first quarter of next year, bringing to an end the consultations that began in 2014.
Banks Closing off Crypto Dealings
Business Report states that local banks have already begun clamping down on virtual currency companies, with First National Bank last week closing all business banking accounts for companies dealing with cryptocurrencies, blaming a number of factors for the decision:
FNB considers this to be a prudent course of action following a comprehensive review of the potential risks currently associated with these entities, particularly given that appropriate regulatory frameworks are not yet in place.
AltCoinTrader, one of One of South Africa’s largest cryptocurrency exchanges, has seen their account closed after having been an FNB customer since 2015, something that CEO Richard de Sousa was less than happy with:
We are disappointed that a financial institution would succumb to international pressure like this, with banking services being denied to individuals and industry players around the globe.
A Pattern Repeating
The use of cryptocurrencies has increased in South Africa in recent years as it represents an easy way for citizens to breach the maximum international sending threshold. Citizens can send up to R1 million ($68,100) without declaration, although they can send a further R10 million ($680,100) with special application to the South African Revenue Service. Crypto allows them to send any amounts wherever they like, and it seems that individuals like spending and sending their own money how they wish.
The act of banks banning crypto represents a pattern that has been repeated across the world since cryptocurrency gained worldwide notoriety in 2017, and it seems that now is South Africa’s turn. The UK, the US, and even Australia have been hit with banks ceasing to do business with crypto entities, with the best known case perhaps belonging to QuadrigaCX who saw Canadian Imperial Bank of Commerce freeze $20 million of the exchange’s funds QuadrigaCX in 2017.