The banking regulator claimed that cutting off clients who use cryptocurrency could put financial integrity at risk.
In an effort to stop illegal activities, the Prudential Authority of the Reserve Bank of South Africa issued guidelines to its subsidiaries that urged banks not to completely cut off their relationships with cryptocurrencies.
It implied that over time, committing such a crime might put more people at risk.
CEO of the Prudential Authority Fundi Tshazibana signed the legal notice. Due to murky rules or a high-risk factor, some South African banks had previously severed ties with crypto asset service providers (CASPs), as they are referred to in the document.
However, the notice emphasizes that risk assessment doesn’t entail completely abandoning cryptocurrency:
“Risk assessment does not necessarily imply that institutions should seek to avoid risk entirely (also referred to as de-risking), for example, through wholesale termination of client relationships which may include CASPs.”
It goes on to say that because it may restrict the options for handling problems like money laundering, such a move could even be a “threat” to overall financial integrity.
The Reserve Bank published a risk analysis of the regional banking industry at the end of July. The top 10 threats noted by the leading local banks were said to include cryptocurrencies and virtual assets.
Prior to the publication of the report, the South African government unveiled a plan that called for regulating cryptocurrencies as financial assets. Within the upcoming 12 months, classification-related laws are anticipated.
South African cryptocurrency exchanges responded favorably to this announcement. Many people think that this action will increase adoption in the nation. Significant innovation and interest in the cryptocurrency community, including “in real life” (IRL) crypto use cases, have been observed in the nation.
Crypto projects like Bitcoin Ekasi, a township that adopted Bitcoin to support the financial independence of the area’s underserved communities, and Unravel Surf Travel, a South African-based pro-crypto travel agency, can be found there.
