FirstRand Bank, one of the ‘big five banks’ in South Africa, has notified major South African cryptocurrency exchanges – Luno, ICE3X, and VALR – that their bank accounts will be closed.
In a letter, FirstRand Bank informed these cryptocurrency exchanges that it had decided to withdraw its banking services to crypto exchanges and other companies dealing or trading in cryptocurrencies.
An excerpt from the letter reads:
“First Rand Bank has been considering its risk appetite in respect of virtual currencies and virtual currency exchanges for some time.
Within this context the bank has taken the decision to discontinue the provision of banking services to virtual currency exchanges and/or entities dealing/trading in virtual currency.
Future regulatory clarity may cause us to revise our decision.”
Speaking about these notices, here are some comments from the affected exchanges:
“We can confirm that FNB has decided to close our account with effect from end March 2020, along with other crypto exchanges in South Africa. We do not anticipate any impact to our existing customers as we have other banking relationships in place to support deposit and withdrawals on the platform. Luno is committed to working the the SA Reserve Bank and collaborating with other regulators to ensure they are prepared to embrace this change to our financial infrastructure.” ~ LUNO
“FNB has made this conservative move and ICE3X looks forward to more clear guidelines from the crypto-asset policy makers of South Africa. These policies will allow FNB to rejoin the forward-thinking banks. Our customers are unaffected as we have alternative banking arrangements for our deposits and withdrawals.” ~ ICE3X
“We confirm that FNB has communicated to us its decision to discontinue the provision of banking services to the entire cryptocurrency industry, including all exchanges as well as other entities dealing or trading in cryptocurrency. We will communicate the termination date to our customers in advance to ensure a seamless transition to our other banking partners, some of whom are already enabled on the VALR platform.” ~ CEO, VALR
While regulation continues to be a major barrier in crypto adoption globally, the current development in South Africa is further proof that regulatory clarity will be needed before we can see massive crypto adoption on the continent.
While this may be an isolated case and not exclusive to South Africa, it may point to an underlying decision by the SA Reserve Bank and could embolden or coerce other financial institutions to take a similar stand.
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