South African Reserve Bank Encourages Crypto-Friendly Behavior

The Reserve Bank of South Africa Prudential Authority shipped guidelines to its subsidiaries in an effort to prevent illicit activity, e...



The Reserve Bank of South Africa Prudential Authority shipped guidelines to its subsidiaries in an effort to prevent illicit activity, encouraging banks not to cut all ties to cryptocurrency.

He suggested that such an act could lead to greater long-term risk.

The official notice was signed by the CEO of the Prudential Authority, Fundi Tshazibana. In the past, some South African banks had severed their ties with Crypto-Asset Service Providers (CASPs) – as they are called in the document – ​​due to unclear regulations or a high risk factor. .

However, the advisory stresses that risk assessment does not mean giving up on crypto altogether:

“Risk assessment does not necessarily imply that institutions should seek to avoid risk altogether (also called risk reduction), for example, by terminating customer relationships en bloc, which may include PSAPs.”

He goes on to say that such a move could even pose a “threat” to general financial integrity, as it could limit opportunities to deal with issues such as money laundering.

At the end of July, the Reserve Bank published an assessment of risks within the local banking sector. According to the report, cryptocurrencies and virtual assets were among the top 10 threats identified by major local banks.

Related: European Central Bank addresses guidance on licensing digital assets

Prior to the report, the South African government released a plan that called for the classification of crypto as a financial asset for regulatory purposes. Classification laws are expected within the next 12 months.

Crypto exchanges in South Africa reacted positively to this ad. Many believe that this decision will promote adoption in the country. The country has seen major signs of interest and innovation in the crypto community, including “in real life,” or IRL, crypto use cases.

South Africa is home to crypto projects such as Bitcoin Ekasi, a township that introduced Bitcoin as a way to build financial independence for underserved local communities and Unravel Surf Travel, an Africa-based pro-crypto travel agency from South.