South Africa’s local Bank FNB decides to discontinue banking services to cryptocurrency exchanges but gives time until March 2020.
Big South African cryptocurrency exchanges, such as Luno, ICE3X, and VALR have confirmed that they have received a notification from FirstRand Bank (FNB), which is one of the largest banks in the country on Nov. 19. The letter sighted two reasons as to why the bank had to make the move, one being the “Risk appetite” revolving around the “Virtual currencies” and “regulatory clarity”. Marius Reitz, the general manager for the Exchange firm Luna Africa, publicly announced,
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.
He further went on to say that the crypto-industry was yet new to the traditional banking sector and lacked formal regulations. Until formal regulations aren’t put in place, the industry will continue to face challenges all around the globe.
ICE3X told South African online newspaper that although they were happy with the services of FNB, the bank had suddenly made “a conservative move”.
These policies will allow FNB to rejoin the forward-thinking banks. Our customers are unaffected as we have alternative banking arrangements for our deposits and withdrawals.
VALR cofounder Farzam Ehsani disclosed that they had conveyed to their customers to transfer their digital assets to other banks that are still providing us their services. He further stated
We are encouraged by our discussions with South African regulators and other South African banks that FNB’s decision remains an isolated case.
However, FNB has not followed in the manner of some other big banks around the world and given formal notice and enough time for the exchanges to make arrangements.
Just recently, Bank of America (BOA) discontinued banking services to Ex PayPal CEO Botha and did not even do the courtesy of conveying a formal notice prior to closure of the account. Barclays Bank had also ended their deal with the San Francisco based Bitcoin exchange both had signed in March of 2018. Another recent example was the case of Reserve bank of India shutting down any crypto-related operations. This goes to show that traditional banks are still skeptical of cryptocurrencies and how they operate their businesses.