Banking giant to shut down South African crypto exchange accounts

Banking giant shut down South African crypto exchange accounts

South African banking giant FirstRand has informed cryptocurrency exchanges and other related businesses in the country that it will be terminating their accounts.

Citing the current regulatory climate in the country, FirstRand’s commercial and retail banking division – First National Bank (FNB) – sent letters to an undisclosed number of South African businesses informing them of its decision.

“FirstRand Bank has been considering its risk appetite with respect to virtual currencies and virtual currency exchanges for some time,” the letter stated.

“Within this context, the bank has taken the decision to discontinue the provision of banking services to virtual currency exchanges and entities dealing/trading in virtual currency. Future regulatory clarity may cause us to revise our decision.”

FirstRand is one of South Africa’s “Big Four” banks and its subsidiary, FNB, is believed to be the country’s oldest banking institution.

FNB Bank - a division of FirstRand
FNB Bank – a division of FirstRand (Flickr)

Affected exchanges react

South African crypto exchanges Luno, ICE3X, and VALR are just a few of the businesses impacted by FirstRand’s decision.

In a statement published on its website, Luno confirmed that it “is affected by this decision.”

“This means that FNB may be closing our business bank account in the second quarter of 2020,” the exchange said.

“We do not anticipate any impact to our existing or future customers, as we have other banking relationships in place to support deposit and withdrawals on the platform. Customers with FNB accounts will be able to deposit into Luno’s fully integrated Standard Bank account.”

Similarly, VALR published a press release confirming 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.”

While it is currently in discussion with the bank regarding the exact termination date, the exchange appears to be maintaining a positive outlook for the future.

“We are encouraged by our discussions with South African regulators and other South African banks that FNB’s decision remains an isolated case,” it stated.

For its part, ICE3X is encouraging its customers – particularly those who are also FNB clients – to “keep calm and carry on.”

Crypto adoption steadily rising despite banks’ best efforts

It’s worth noting that FNB is not the only financial institution that has severed ties with crypto exchanges in recent months.

In August of this year, reports emerged that Barclays, a leading UK-based bank, had stopped servicing Coinbase crypto exchange, leaving the platform with no other choice but to ink a fresh deal with a new banking partner, ClearBank.

While crypto adoption may have hit a stumbling block in South Africa with this latest development, the innovation is still being welcomed by many institutions across the globe. 

Micky recently reported that the European Union (EU), is considering the possibility of launching its own cryptocurrency. This is a counter-move to the perceived threat of Facebook’s proposed Libra cryptocurrency. 

“At the very least, we need a robust regulatory framework to deal with virtual currencies,” said Vice-Chair of the European Parliament’s Committee on Economic and Monetary Affairs Markus Ferber.

“The (executive EU) Commission has been way too … complacent on the issue so far. With the threat of Libra on the horizon, it is time for action now.”

EU regulators have made their stance clear concerning project Libra, and it is entirely possible that the cryptocurrency may not be given a chance to operate in Europe, as a number of E.U. nations have raised concerns over the possibility of money laundering and doubts regarding data protection. 

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