South African banks are being required to block clients from buying cryptocurrencies on international exchanges with their credit cards, MyBroadband has learned.
This comes after Absa clients reported no longer being able to use their debit or credit cards to buy cryptocurrencies from Binance, the largest centralised digital asset exchange in the world.
Clients who try to buy cryptocurrencies from Binance receive the following SMS message from Absa:
Absa: Temporary lock enabled for online purchases on credit card ending with **0000. You can deactivate it via Absa Online, the Banking App or by calling the number at the back of your card for help. Auth FSP/NCRCP7
When attempting to clear the temporary lock, clients reported that the Absa online banking interface shows that no such lock is in effect.
The Absa Private Banking contact centre said that the block went into effect on Friday. It also informed clients that transactions with Binance are being blocked because it does not comply with regulations.
However, spokespeople for Absa and Binance have told MyBroadband that this is only partially true.
“In line with the country’s exchange control regulations, purchasing cryptocurrencies on debit and credit cards is not permissible in South Africa,” Absa told MyBroadband.
“Given that this is an industry matter, and not Absa-specific, we suggest that you approach the SA Reserve Bank for a more comprehensive view.”
Absa’s feedback is an about-face from the stance in 2019, when the bank said that there were no restrictions on buying cryptocurrencies with your card.
“Absa retail customers choosing to partake in any form of cryptocurrency dealings with their credit or debit cards, are free to do so,” the bank told MyBroadband at the time.
According to Binance, it is fully compliant with all current crypto regulations within the Africa region.
It also said that Absa clients being unable to use Binance’s fiat onramp is not because Absa blocked Binance.
“The block to users transactions/cards could be related to [the] South African Reserve Bank regulation and foreign exchange regulations,” Binance said.
According to the Reserve Bank website, cross-border or foreign exchange transfers for the explicit purpose of purchasing crypto assets is not allowed.
“Neither the Currency and Exchanges Manual for Authorised Dealers nor the Currency and Exchanges Manual for Authorised Dealers in foreign exchange with limited authority allow [this],” the Reserve Bank stated.
“From an exchange control perspective, the Financial Surveillance Department is unable to approve any transactions of this nature.”
According to the Reserve Bank, the Exchange Control Regulations prohibit transactions where capital or the right to capital is, without permission from National Treasury, directly or indirectly exported from South Africa.
This includes transactions where an individual purchases crypto assets in South Africa and uses them to externalise ‘any right to capital’.
The Reserve Bank warned that contravening these regulations is a criminal offence.
“The repatriation of value to South Africa through crypto assets is not permitted as part of an individual’s single discretionary allowance and/or foreign capital allowance,” it stated.
“This is because of the nature of the assets and because the transaction is currently not reportable on the FinSurv Reporting System.”
Similarly, non-residents who have introduced crypto assets to South Africa for local sale will not be able to transfer the sale proceeds abroad.
You are still allowed to buy crypto assets from abroad using your single discretionary allowance of up to R1 million and/or their individual foreign capital allowance of up to R10 million.
The Reserve Bank said that a local authorised dealer will be able to assist individuals with these allowances.
MyBroadband contacted the Reserve Bank for comment, but it did not respond by the time of publication.