The Prudential Authority of the South African Reserve Bank sent guidelines to its subsidiaries in an effort to prevent illicit activities, encouraging banks not to cut all ties with cryptocurrencies.
He suggested that such an act could cause 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 ties with crypto asset service providers (CASPs) — as they are called in the document — due to a lack of regulatory clarity or a high-risk factor.
However, the advisory highlights that risk assessment does not mean shelving cryptocurrencies altogether:
“Assessing risk does not necessarily imply that entities should try to avoid risk altogether (also called “de-risking”), for example, through wholesale termination of customer relationships, that may include CASPs.”
It goes on to say that such a move could even be a “threat” to overall financial integrity, as it could limit the possibilities of dealing with issues such as money laundering.
At the end of July, the Reserve Bank published an assessment of the risks in the local banking sector. According to the report, cryptocurrencies and virtual assets were among the top 10 threats identified by major local banks.
Before the report, the South African government unveiled a plan that involved classifying cryptocurrencies as financial assets for regulatory purposes. Laws regarding classification are expected in the next 12 months.
Cryptocurrency exchanges in South Africa reacted positively to this announcement. Many believe that this measure will boost adoption in the country. The country has seen great signs of interest and innovation in the cryptocurrency community, including “real life” cryptocurrency use cases.
South Africa is home to cryptocurrency projects such as Bitcoin Ekasi, a municipality that introduced Bitcoin as a means of bolstering financial independence for underserved local communities, and Unravel Surf Travel, a South African pro-crypto travel company.
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