First National Bank (FNB) has started blocking its clients from buying cryptocurrency with their credit cards from overseas exchanges.
One MyBroadband reader said that they tried to purchase a small amount of cryptocurrency through Binance on Thursday morning and were blocked.
With this move, FNB joins Absa and Standard Bank in banning clients from buying cryptocurrencies using their credit cards from offshore crypto-asset exchange providers.
“As per the exchange control regulations, the purchase of cryptocurrency will no longer be allowed, and all international Debit and/or Credit Card transactions will be declined,” FNB said in a message to clients.
“Customers who wish to purchase International Cryptocurrency Assets may consider a SWIFT transaction via our Foreign Exchange Desk, in accordance with applicable Foreign Exchange Allowances.”
Farzam Ehsani, the CEO of South African cryptocurrency exchange VALR, took issue with FNB’s message to clients on Twitter.
“This message is false, FNB. The purchase of cryptocurrency most certainly is allowed in SA from local platforms,” Ehsani stated.
“Kindly correct your message. This is a disservice to your customers as you are currently spreading fake news.”
The South African Reserve Bank recently published a set of documents stating that several common uses of cryptocurrency in South Africa are actually criminal offences.
This includes transferring crypto assets offshore or to decentralised exchanges, whether from your own wallet or a local exchange provider like Luno, VALR, and AltCoinTrader.
According to the Reserve Bank, transferring cryptocurrency overseas is a violation of South Africa’s exchange control regulations — a set of laws that date back to 1961.
Contravening South Africa’s exchange control regulations carries a penalty of a R250,000 fine and possibly up to five years imprisonment.
The fine may be increased up to the value of the offending transaction under certain circumstances. However, the regulations specifically link this escalation to “any security, foreign currency, gold, bank-note, cheque, postal order, bill, note, debt, payment or goods”.
However, while it may be a criminal offence to transfer crypto-assets out of South Africa, and the Reserve Bank may have blocked the international purchase of cryptocurrency via credit card, South Africa’s central bank has also said that it remains legal to buy crypto assets in South Africa.
You are also allowed to make use of your Single Discretionary Allowance and Foreign Investment Allowance to move money to an offshore cryptocurrency exchange and buy assets from there.
The Reserve Bank stated that you are under no obligation to return them to South Africa once you have purchased crypto assets offshore.
When asked for clarity on the ban on credit card purchases from exchanges like Binance, the Financial Surveillance Department of the Reserve Bank (FinSurv) provided the following statement:
“Credit and/or debit cards, including co-branded cards issued by banks — as licensed by American Express, Diners Club, MasterCard or Visa — may not be utilised to purchase crypto assets on a foreign crypto-asset exchange.”
According to FinSurv, international credit card purchases from South Africa are allowed under Section B.16(E)(i) of the Currency and Exchanges Manual for Authorised Dealers.
Resident individuals or local entities in whose name one or more bank credit and/or debit cards have been issued may be permitted to make permissible foreign currency payments for small transactions (e.g. imports over the Internet), by means of such credit and/or debit cards”.
However, FinSurv said that the purchase of crypto assets from a foreign crypto-asset exchange is not regarded as a payment for imports.
It did not further clarify what makes buying cryptocurrencies on a credit card any different from buying any other digital good.