South African banks are restricting its customers from using cards to buy cryptocurrencies from international exchanges. Absa has restricted all the clients from purchasing crypto assets via international exchanges. The regulatory authorities have said it is important to have crypto regulations to stop risks for people.
In another setback to the people of South Africa, banks in the nation have stopped their clients from using debit and credit cards to buy crypto from international exchanges. The news was broken by a local news publication.
As per the reports by Mybraodband, the customers of Absa, a bank based in Johannesburg were blocked in line with South African reserve banks regulations and were industrywide. The block took effect Friday.
The customers at Absa bank said that they can not purchase digital currencies with Absa issued debit and credit cards on Binance. The investment bank is sending messages to its clients, saying there is a temporary lock enabled for online purchases on credit cards. This can be deactivated via the bank’s online app or by calling the customer care number. However, the picture is different as there is no such option to unlock transactions.
The transactions at Absa have been blocked since last week as several international cryptocurrency exchanges have not complied with local South African regulations.
Absa has informed that as per the country’s exchange control regulations, buying cryptocurrencies on debit or credit cards is not allowed in South Africa.
Central Bank regulations mandatory
As per the existing regulations, South Africa does not allow any cross-border or foreign exchange transfers for the explicit purpose of purchasing crypto assets. This was informed by the Central Bank on its website.
The reserve bank has put a hold on the purchases of cryptocurrencies because of the nature of the assets and because the transaction is untraceable on the FinSurv Reporting System. However, Binance informed that they comply with the regulations by the South African regulatory framework.
Several banks taking a move
Besides Absa, several other banks have stopped transactions for crypto purchases. In most of the exchanges, trading is put on hold and it is not only the case for a specific exchange. HSBC has also delisted MicroStrategy stocks from its offering as the company has too many bitcoin holdings.
South Africa’s crypto regulations- an overhaul
The financial surveillance department is not able to improve any transactions of this nature. The news may trigger concern about a regulatory crackdown on South Africa’s crypto industry.
At the beginning of this month, the Financial Sector Conduct Authority had announced that the authority will likely start regulations on crypto assets in a phased and structured manner. The inter-governmental Fintech Working Group publishes a paper that has mentioned imposing anti-money laundering on crypto-assets service providers and monitoring cross-border financial flows is necessary.
In many countries of South Africa Central Banks have asked Commercial Banks to stop processing transactions involving trading in cryptocurrencies. The need for proper regulation is very important in many countries of South Africa. As a result, people are adopting either peer-to-peer trading or underground trading as alternatives. This is because mainstream crypto exchanges and other open platforms encounter issues in settling payments involving banks.
Hence, there is a need for regulations in the country as the crypto sector is facing a lot of problems and one of the biggest risks is the lack of proper regulations. As per the new regulatory framework, South Africa plans on limiting the exposure of banks and other financial institutions to crypto-assets so the risk could over time spillover. There will be financial stability then.
Kenya has banned banks from processing transactions in cryptocurrencies. People are adopting mobile money and other digital payments for the set cryptocurrency to currency.
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