The South African Reserve Bank is planning on introducing new cryptocurrency rules to govern the use of digital currencies in the country. This is initiative is intended to prevent crypto operations in South Africa from being used in currency control evasion.
Reports state that the rules will be deployed early next year, as stated by Kuben Naidoo, the deputy Governor, Sarb.
South Africa’s FNB Shuts Down Accounts Held by Cryptocurrency Companies
Following these reports, the First National Bank (FNB) among other local banks have started closing bank accounts related to cryptocurrency companies. According to FNB, after reviewing the risks associated with crypto companies, this is the best way to deal with the situation, given that there is no appropriate legal framework put in place.
AltCoin Trader, one of the largest cryptocurrency exchanges in South Africa, has expressed their disappointment in FNB’s decision. AltCoin Trader, who has been working together with FNB since 2015, is surprised that they have succumbed to international pressure.
Is Currency Control in Place in South Africa?
South Africa has limitations as to how much money an individual or a company can spend outside the country. With Sarb implementing the said cryptocurrency rules, the currency control will apply to cryptocurrency as well. The limit to the amount of money an individual or company can send outside the country without declaration is R1million. However, one can apply to the South African Review Service and thus be able to send up to R10 million for foreign investment.
These rules will limit the high-net-worth South Africans seeking to protect their wealth against Rand’s devaluation and thus will be forced to look for other ways to send money outside the country. The borderless nature of cryptocurrencies makes it the best method of sending money to any part of the world.
SA crypto, the largest cryptocurrency community in South Africa, had written to Sarb urging them to adopt more progressive statutes when dealing with digital assets. SA Crypto stated that regressive regulations would hinder innovation as well as discourage investment in South Africa. Given that the cryptocurrency market has a $210 billion market cap, it is evident that the crypto industry has a substantial part in the economy.
The Fourth EU Money Laundering Directive
In Germany, banks were not supposed to offer direct access to crypto assets, but this will change soon with the new law allowing banks to offer sales and storage of crypto. Since banks are experienced with risk management and assets, safekeeping, are committed to investor protection and are controlled by financial supervision.
The German banking association is confident that banks will be able to prevent money laundering and terrorism financing with digital currencies. With the new bill, investors will be able to use Germany-based funds to invest in crypto without having to put their money abroad.
This new bill, unlike the new Sarb rule in South Africa, will push Germany into the front line of being the crypto haven.