Crypto linked bank accounts shut down in South Africa: report

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Major cryptocurrency exchanges in South Africa are set to have their bank accounts at one of the country’s leading banks closed. According to a local report, the FirstRand Bank has decided to discontinue its relationship with crypto-linked businesses, citing unclear regulations.

The bank, which is the second-largest bank in South Africa, has been considering its position regarding crypto and it’s decided to cut ties with the industry, a letter seen by local news outlet My Broadband stated. Part of the letter stated:

“FirstRand Bank has been considering its risk appetite in respect of virtual currencies and virtual currency exchanges for some time. Within this context the bank has taken the decision to discontinue the provision of banking services to virtual currency exchanges and/or entities dealing/trading in virtual currency.”

Some of the exchanges affected by the bank’s decision include Luno, ICE3X and VALR. For Luno, which hit 3 million wallets two months ago, business will continue as usual, at least for the time being.

The company’s general manager for Africa Marius Reitz told the outlet, “We do not anticipate any impact to our existing customers as we have other banking relationships in place to support deposit and withdrawals on the platform.”

Despite the latest setback, Reitz remains optimistic that the future of crypto in Africa is bright. He added, “In the absence of formal regulations, banks will continue to assess their exposure to cryptocurrencies. Luno is committed to working with the SA Reserve Bank and collaborating with other regulators to ensure they are prepared to embrace this change to our financial infrastructure.”

The other affected exchanges also assured their users that the ban wouldn’t impact their operations. VALR’s cofounder Farzam Ehsani told the outlet, “Our FNB banking facilities currently remain operational, and we are in discussions with FNB about the exact date of termination. We will communicate this date to our customers in advance to ensure a seamless transition to our other banking partners, some of whom are already enabled on the VALR platform.”

VALR, which raised $1.5 million in a funding round earlier this year led by Bittrex, believes that the move by FirstRand is an isolated case and that the other banks will continue working with crypto firms.

The lack of access to banking services isn’t unique to South African crypto firms. Crypto companies have struggled to access banking services in Europe, the U.S. and in Latin America as well. U.K. banking giant Barclays severed its relationship with Coinbase in August this year after 18 months. JPMorgan was also on the spotlight after it closed the account of crypto startup without notice, shortly after launching its own version of a cryptocurrency. In Brazil, a number of crypto exchanges have had to seek legal redress after their bank accounts were shut down.