In an effort to stop illicit activities, the Prudential Authority of the Reserve Bank of South Africa issued guidelines to its branches. It encouraged banks to not cut all ties to cryptocurrency.
This suggested that such an act could pose a greater risk over the long-term.
Fundi Tshazibana, the Prudential Authority CEO signed the official notice. Due to unclear regulations and high risk factors, certain South African banks have cut ties with “Crypto Asset Service Providers” as described in the document.
The notice emphasizes that crypto risk assessment does not mean abandoning it completely.
“Risk assessment doesn’t necessarily mean that institutions should try to avoid all risk (also known as de-risking), such as by terminating client relationships wholesale, which could include CASPs.
The article goes on to state that such a move could be considered a threat to financial integrity as it could limit the ability to treat money laundering issues.
The Reserve Bank published a risk assessment for the local banking sector in late July. The report revealed that cryptocurrencies and virtual assets were among the top 10 threats that top banks in the area identified.
Similar: European Central Bank provides guidance on digital asset licensing
The South African government had released a plan prior to the publication that included the classification of crypto assets as financial assets for regulatory purposes. Within the next 12 month, the laws related to the classification will be released.
This announcement was welcomed by South African crypto exchanges. Many believe that this announcement will encourage adoption in the country. There have been significant signs of interest in and innovation within the crypto community, including IRL cryptocurrency use cases.
South Africa is home crypto projects like Bitcoin Ekasi. This township introduced Bitcoin to help local underserved communities. Unravel Surf Travel is a South African travel pro-crypto travel company.