The Reserve Bank of South Africa (SARB) has recently issued guidelines involving cryptocurrencies and digital assets and has distributed them to the local banks.
The guidelines are to instruct and help the local banks to deal with cryptocurrency companies as well as cryptocurrency assets.
With the latest step taken by the SARB, the central bank has directed the financial institutions in South Africa to deal with cryptocurrency transactions.
This is promising for the cryptocurrency industry as the central bank does not want to put a blockade on cryptocurrencies in the country. Instead, the central bank has encouraged the local banks to deal with cryptocurrency transactions and firms with the right protocols.
Guidelines Shared by the SARB
The guidelines have been shared by the Prudential Authority of the Reserve Bank. In the guidelines, the regulator has encouraged the local banks and institutions not to fully ban cryptocurrencies and cryptocurrency firms.
Instead, the guidelines advise the local banks to deal with digital assets with due diligence. The regulator has asked the local banks to establish a fair relationship with the cryptocurrency firms and crypto-related clients.
Banks to Employ CTF and AML
In the guidelines, the SARB has also advised the local banks to ensure that they have certain key compliances in place to deal with cryptocurrency-related firms and transactions.
As per the central bank, the banks must employ counterterrorism financing and anti-money laundering compliances. This way, they will be better prepared to deal with any kind of anomalies and cases with cryptocurrency transactions or firms.
Why did the SARB have to Intervene?
In recent months, the local banks in South Africa have started perceiving cryptocurrencies as prohibited assets. Therefore, they have resorted to rejecting cryptocurrency firms and cryptocurrencies.
This has put the entire cryptocurrency system in a bad situation in South Africa. While the local banks have continued to reject cryptocurrencies, the central bank has recognized the potential harm it would cause to the entire country.
According to the central bank of South Africa, it would be a catastrophic situation for the financial system in the country if the financial institutions keep rejecting crypto.
Therefore, it is need time that them to adopt cryptocurrencies and the local banks also get used to it. However, the central bank of South Africa pointed out that cryptocurrencies lack regulations in the country.
This is the reason why the central bank of South Africa has issued guidelines so the local banks can be directed to deal with cryptocurrency transactions.
The central bank’s latest move has allowed the cryptocurrency industry to expand in the country. The cryptocurrency sector will grow stronger in South Africa and would gain tremendous adoption.