South Africa’s monetary authority urged local banks not to close refers to the closing price; similar to the same term used in stock trading. their doors to cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. customers.
- South African Central Bank issues guidelines for banks.
- The authority gave banks the green light to work with cryptocurrencies.
- Some banks had closed accounts to digital digital technologies are these electronic tools that have the ability to generate, store or even process data. currency currency is a medium of exchange that defines value. exchanges.
The South African Reserve Bank (SARB), the country’s central bank, has given the green light to banks to serve customers dealing in digital currencies, including exchange businesses that allow customers to trade cryptocurrencies for fiat money or other cryptocurrencies. service providers.
The monetary authority recently published a guideline guide encouraging South African financial institutions not to close their doors to cryptocurrency customers. The statement comes in response to the recent move by some local banks to indiscriminately close accounts linked to cryptocurrency exchanges, as picked up by a report from CoinDesk .
In the note, South Africa’s top banking industry regulator, the Prudential Authority, said decisions by some banks to terminate relationships with cryptocurrency entities “ can pose a threat to overall financial integrity “.
While the authority acknowledged that the decision may have been informed by reasons such as uncertainty regarding the risk of money laundering and terrorist financing, or the lack of formal regulatory requirements applicable to cryptocurrency providers, it does not believe that banks should completely shut themselves off from interacting with cryptocurrency customers.
Central Bank issues guidance on cryptocurrencies
Along these lines, the regulator indicated that risk assessment does not mean abandoning cryptocurrencies altogether and suggested that avoiding digital asset entities could weaken banks’ risk management processes.
“ Risk assessment does not necessarily imply that entities should seek to avoid risk altogether. (also referred to as “de-risking”), for example, by terminating customer relationships that may include CASPs [cryptoasset service providers]. “, the SARB wrote. Then he continued:
The elimination of risk may pose a threat to financial integrity in general and to the application of a risk-based approach in particular, as it could create opacity in the financial conduct of the persons or entities concerned, and eliminates the possibility of addressing the risks.
The SARB document , which was signed by Prudential Authority chief executive officer Fundi Tshazibana and sent to local financial institutions, urges banks to conduct the relevant risk assessment for each cryptoasset a cryptoasset is any digital asset that uses cryptographic technologies to maintain its operation as a currency or decentralized application. (CA) or cryptocurrency service provider, as it notes BitcoinNews.com .
“ It is prudent for banks to be able to categorise customers related to CA/CASP into risk categories by conducting a risk assessment that will assist banks in determining the appropriate level of risk management measures [money laundering, terrorist financing, proliferation financing] required, rather than total avoidance, in line with the application of a risk-based approach. “, wrote the authority.
Crypto regulation in South Africa
As he points out Cointelegraph the guidance comes a few weeks after the South African Reserve Bank issued a risk assessment that included cryptocurrencies and virtual assets among the top 10 threats identified by major local banks.
Earlier reports suggest that banks in South Africa have been sending account an account is essentially a whose purpose is to track the financial activities of a specific asset/ cancellation notices to customers offering cryptocurrency services. According to CoinDesk , some institutions had prevented the mid-2021 customers to use their credit and debit cards to buy cryptocurrency cryptocurrencies. At the time, some banks claimed that the move was meant to ensure compliance with SARB regulations, as recalled by BitcoinNews.com.
The South African government is working on a specific regulation of the sector and has recently suggested a classification of cryptocurrencies as financial assets . According to Cointelegraph, laws relating to such classification are expected within the next 12 months.
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Article by Hannah Estefania Perez / DiarioBitcoin
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