The South African Reserve Bank’s (SARB) Prudential Authority this week has reportedly issued guidance to confirm that banks in the country can work with crypto exchanges. This is according to the international crypto exchange Luno. Marius Reitz, GM for Africa of Luno says the company welcomes this guidance note by a major central bank.
The Prudential Authority also apparently points out that severing relationships with crypto companies may have unintended consequences, such as reduced levels of transparency and challenges with managing risks such as money laundering.
“In stark contrast to other central banks globally, the SARB and other authorities have shown an intent to lead the way both within Africa and internationally in terms of this guidance provided to the banking industry, thereby allowing the rapidly evolving industry to flourish,” says Reitz.
“As we have seen in other markets globally, denial of banking facilities to cryptocurrency companies such as Luno would move the industry underground and/or offshore, and therefore outside the reach of even the best regulation.”
Luno says the cryptocurrency industry has driven economic growth and financial inclusion in South Africa. The exchange says that the industry has created jobs, attracted foreign investment, and generated significant tax revenues for the country.
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Banks are critical service providers to cryptocurrency businesses and enable the public to safely and easily purchase crypto with their local currency.
One of SA’s largest banks unbanked Luno along with other cryptocurrency platforms in March 2020. The bank did not provide specific detail around the risk identified other than to say its decision to close crypto-linked accounts was due to the absence of regulation in the cryptocurrency industry. Other banks followed.
Luno says it had a banking relationship in place with Standard Bank to continue to support ZAR deposits and withdrawals. The exchange holds multiple crypto-specific licences and registrations globally and says it is committed to working with SARB to bring purpose-fit regulation to the local industry.
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“This is a positive step for the growth of the industry. Luno has always maintained that regulation is necessary for the sector to grow responsibly with the confidence and protection of consumers,” Reitz concludes.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry