South African banks are now reportedly blocking clients from buying cryptocurrencies on international exchanges with bank cards.
This development has been reported by clients who say they can no longer buy bitcoin on Binance, the largest exchange by volume globally.
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SEE ALSO: Selected Kenyan Banks Are Sending Cautionaries to Users Trading on Crypto Exchanges via Bank Cards
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Clients who try to buy cryptocurrencies from Binance receive the following SMS message from Absa:
Absa: Temporary lock enabled for online purchases on credit card ending with **0000. You can deactivate it via Absa Online, the Banking App or by calling the number at the back of your card for help. Auth FSP/NCRCP7
According to a spokesperson from Absa:
“In line with the country’s exchange control regulations, purchasing cryptocurrencies on debit and credit cards is not permissible in South Africa.
Given that this is an industry matter, and not Absa-specific, we suggest that you approach the SA Reserve Bank for a more comprehensive view.”
– Absa, South Africa
According to a Binance spokesperson, ‘the block to users transactions / card could be related to the South African Reserve Bank regulation and foreign exchange regulations.’
The Reserve Bank of South Africa has strict exchange controls on the buying and selling of a national currency or to preserve foreign currency reserves.
Some of the controls South African Binance users may have breached include:
- Only authorised dealers are allowed to deal in certain designated foreign exchange transactions, including travel-related transactions
- South African residents are allowed up to an overall limit of R1 million (approximately $70, 000) per calendar year
- The repatriation of value to South Africa through crypto assets is not permitted as part of an individual’s single discretionary allowance and/or foreign capital allowance. This is because of the nature of the assets and because the transaction is currently not reportable on the FinSurv Reporting System
- The resident must produce a valid green, bar-coded South African identity document or smart identification card at the Authorised Dealer when using the allowance
- In turn, the Authorised Dealer must provide the resident’s identification number when reporting the transaction in terms of the FinSurv Reporting System
- Travellers must convert unused foreign exchange to rand within 30 days of returning to South Africa
- Resident individuals with authorised foreign assets may invest in South Africa, provided that where South African assets are acquired through an offshore structure (loop structure), the investment is reported to an Authorised Dealer as and when the transaction(s) is finalised
- A South African Revenue Service (SARS) customs declaration may be required for any goods taken outside South Africa. If the insured value of the item exceeds R200 000, prior written approval from the Financial Surveillance Department through an Authorised Dealer is required. If the items exported will not be returned to South Africa and their insurance value exceeds R50 000, an application must be submitted to the Financial Surveillance Department through an Authorised Dealer
According to the Reserve Bank, contravening the above exchange control regulations is a criminal offense.
While no reason has been given to the foreign exchange block on South African residents buying crypto, the above reasons could have contributed to the restrictions that are happening across the crypto space in South Africa.
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RECOMMENDED READING: Central Bank of Kenya Cautions All Commercial Banks in Kenya against Dealing in Virtual Currencies
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