South African financial institutions are now allowed to interact with funds linked to cryptocurrencies
and should not indiscriminately block all crypto customers, the country's central bank said.
Banks in the country "may act as conduits for funds" linked to service providers of crypto assets and "may now play a role with customers who wish to buy" or "receive payouts in fiat currency" in their bank accounts for crypto sales, the South African Reserve Bank (SARB) said in new guidelines published this week.
The guidelines were published after some local banks previously decided to close accounts linked to crypto exchanges, citing risks. In the published document, the SARB said it was aware that some banks in the country have blocked customers with ties to crypto. It added that while a thorough risk assessment is necessary, the "large-scale termination of customer relationships" poses a threat to financial integrity.
"Risk assessment does not necessarily imply that institutions should strive to avoid risk entirely," the SARB said.
In June 2021, some banks in South Africa also blocked customers from using their credit and debit cards to purchase crypto on foreign exchanges, while the central bank warned that existing regulations did not allow "cross-border or foreign exchange transfers for the express purpose of purchasing crypto assets
South Africans may, however, use their annual "single discretionary allowance" of up to 1 million South African rand (about €59,000) or foreign capital allowance of up to 10 million rand (€590,000) to buy crypto.