Global cryptocurrency investment app Luno has welcomed a guidance note issued by the South African Reserve Bank’s (SARB) prudential authority which confirms that banks can work with crypto exchanges.
The prudential authority points out that severing relationships with crypto companies may have unintended consequences, such as reduced levels of transparency and challenges with managing risks such as money laundering.
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Marius Reitz, Luno’s general manager for Africa, says, “In stark contrast to other central banks globally, the SARB and other authorities have shown an intent to lead the way both within Africa and internationally in terms of this guidance provided to the banking industry, thereby allowing the rapidly evolving industry to flourish.
“As we have seen in other markets globally, denial of banking facilities to cryptocurrency companies such as Luno would move the industry underground and/or offshore, and therefore outside the reach of even the best regulation.”
The cryptocurrency industry has driven economic growth and financial inclusion in South Africa. The industry creates jobs, attracts foreign investment, and generates significant tax revenues.
Banks are critical service providers to cryptocurrency businesses and enable the public to safely and easily purchase crypto with their local currency.
One of South Africa’s largest banks unbanked Luno along with other cryptocurrency platforms in March 2020. The bank did not provide specific detail around the risk identified other than to say its decision to close crypto-linked accounts was due to the absence of regulation in the cryptocurrency industry. Other banks followed.
Luno had a banking relationship in place with Standard Bank to continue to support ZAR deposits and withdrawals.
Luno holds multiple crypto-specific licences and registrations globally and is committed to working with SARB to bring purpose-fit regulation to the local industry.
Reitz concluded, “This is a positive step for the growth of the industry. Luno has always maintained that regulation is necessary for the sector to grow responsibly with the confidence and protection of consumers.”