FNB shuts down South African cryptocurrency-linked bank accounts

Major South African cryptocurrency exchanges – including Luno, ICE3X, and VALR – have been notified by FNB that their bank accounts will be closed.

According to a letter seen by MyBroadband, FirstRand Bank told the cryptocurrency exchanges that it has been considering its “risk appetite” regarding virtual currencies and related exchanges, and has decided to discontinue the provision of banking services to certain companies.

FirstRand Bank added that it may change its decision if regulation around the industry is clarified.

An excerpt from the letter states:

FirstRand Bank has been considering its risk appetite in respect of virtual currencies and virtual currency exchanges for some time.

Within this context the bank has taken the decision to discontinue the provision of banking services to virtual currency exchanges and/or entities dealing/trading in virtual currency.

Future regulatory clarity may cause us to revise our decision.

Regulation and exposure

“We can confirm that FNB has decided to close our account with effect from end March 2020, along with other crypto exchanges in South Africa,” Luno Africa general manager Marius Reitz told MyBroadband.

“We do not anticipate any impact to our existing customers as we have other banking relationships in place to support deposit and withdrawals on the platform.”

“In the absence of formal regulations, banks will continue to assess their exposure to cryptocurrencies. Luno is committed to working with the SA Reserve Bank and collaborating with other regulators to ensure they are prepared to embrace this change to our financial infrastructure,” he said.

“We need to remember that cryptocurrencies are very new and so this move is not unique to SA while regulation across the globe continues to be shaped; it is one of the biggest challenges crypto companies face globally.”

This issue is not exclusive to South Africa – Barclays recently ended its relationship with Coinbase, one of the biggest cryptocurrency exchanges in the world.

Reuters reported that Barclays’ decision was the latest sign of large global banks’ increasing reluctance to do business with cryptocurrency companies.

Users unaffected

ICE3X told MyBroadband that it had been notified of its FNB accounts being shut down, adding that its customers would not be affected.

“ICE3X has been using FNB for a number of years and we have been happy with its service,” said ICE3X.

“FNB has made this conservative move and ICE3X looks forward to more clear guidelines from the crypto-asset policy makers of South Africa.”

“These policies will allow FNB to rejoin the forward-thinking banks. Our customers are unaffected as we have alternative banking arrangements for our deposits and withdrawals.”

It is unclear how cryptocurrency traders, investment companies, ICOs, and other related businesses will be affected by FNB’s decision.

MyBroadband also asked VALR for feedback, which said it had been affected by FNB’s decision.

“We confirm that FNB has communicated to us its decision to discontinue the provision of banking services to the entire cryptocurrency industry, including all exchanges as well as other entities dealing or trading in cryptocurrency,” said VALR cofounder Farzam Ehsani.

“Our FNB banking facilities currently remain operational, and we are in discussions with FNB about the exact date of termination. We will communicate this date to our customers in advance to ensure a seamless transition to our other banking partners, some of whom are already enabled on the VALR platform.”

“We are encouraged by our discussions with South African regulators and other South African banks that FNB’s decision remains an isolated case.”

He said VALR is hopeful that future regulatory clarity will cause FNB to revise its decision.

“We welcome the positive reception we have received from other South African financial institutions that have banked us and have recognised our significant investment and commitment to complying with local and international guidelines, regulations, and laws,” said Ehsani.

FNB responds

MyBroadband asked FNB for comment on its decision to close cryptocurrency-related bank accounts, but the bank said it would not be able to provide feedback.

“Due to the confidential nature of our customer relationships, FNB is not in a position to provide any further details,” it said.

Now read: Bitcoin continues to fall

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FNB shuts down South African cryptocurrency-linked bank accounts