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FirstRand Bank has notified some of the most major cryptocurrency exchanges in South Africa about the closure of their accounts. These crypto exchanges include VALR, Luno and ICE3X.
The decision came out after the bank reconsidered its risk factor when it comes to digital currencies and decided to discontinue working with companies that it considered to increase the risk factor. The decision, however, can be revised. According to the bank’s statement, it might change its decision if the rules and regulations involving the cryptocurrency industry are clarified.
Marius Reitz, Luno Africa General Manager talked about the decision in detail. The bank anticipates no negative impact on its customers and “will continue to assess their exposure to cryptocurrencies.” Since cryptocurrencies currently reside in an uncharted territory, the decision is not shocking. As the rules regarding these virtual currencies continue to change and evolve, the bank’s decision will also change according to the changes.
This issue of large global banks refusing to work with cryptocurrencies is not new, neither is it limited to South Africa. Recently, Barclays also ended its dealings with one of the largest crypto exchanges in the world, Coinbase; in addition, several major Wall Street banking firms also disassociated themselves from crypto entities already at the end of last year.
One would expect that the users of these crypto exchanges in South Africa would be affected by this decision; however, according to the spokesperson of CE3X this is not the case. He commented how the company has enjoyed the services of FNB over the years and still looks forward to working with the bank again. He stated:
“FNB has made this conservative move and ICE3X looks forward to more clear guidelines from the crypto-asset policy makers of South Africa.”
Other Crypto Firms Are Concerned
VALR, on the other hand, claims that it has suffered due the decision of the bank. The accounts are not yet terminated, and the company is in talks with the bank to ask exactly when the policy would be fully executed.
The company hopes and is ensured by regulators in South Africa that the decision is only limited to FNB and will not be adopted across the country. The company hopes that the decision will be revoked in the future once more clear guidelines are introduced.
Farzam Ehsani, VALR’s cofounder said how other South African financial institutes have shown positive attitude towards the company and appreciate working with them, unless of course the company follows SA’s rules and regulations.
It is still too early to tell how this decision will impact cryptocurrency traders, initial coin offerings (ICOs) and other businesses related to cryptocurrency.