South African banks Bitcoin-shy

While Bitcoin is not usually associated with more formal financial institutions such as banks, news that Standard Bank had been testing Bitcoin trading systems internally raised questions about what other local banks thought of cryptocurrencies.

Standard Bank’s Bitcoin pilot was outed in a presentation at FinovateEurope by two of the founders of Switchless, who reportedly said that they provided the technology for the trial.

Switchless was asked to confirm whether their technology was tested by Standard Bank, but the company declined to comment at the time.

A spokesperson for Standard Bank later confirmed that it did run an internal pilot, but also said that the trial had run its course and would not be launched to the public.

The bank was also very specific about the scope of the trial when asked about it.

“It was instituted exclusively within the bank and participation was limited to 8 selected members of staff. No customers participated in the pilot,” Standard Bank said.

Standard Bank internal Bitcoin pilot with Switchless, FinovateEurope 2014
Standard Bank internal Bitcoin pilot with Switchless, FinovateEurope 2014

Although Standard Bank opted not to launch Bitcoin services, it remained interesting to ask its competitors for their opinions on, and plans for cryptocurrencies such as Bitcoin.

The responses from Absa, First National Bank (FNB), and Nedbank were reserved. Of the three, only Nedbank responded to questions.

“We are currently monitoring the development of Cryptocurrencies globally to understand the impact and opportunities locally,” said Ilze Wagenaar, head of digital innovation and payments for Nedbank.

Absa declined to comment, while First National Bank did not comment at all.

Though none of the banks said why they are so Bitcoin-shy, recent feedback from the South African Reserve Bank (SARB) to questions that were put to it by BusinessTech hints at a reason.

“Bitcoin has no legal status or a regulatory framework. Thus it poses a number of risks for those that would choose to transact with it such as the lack of guarantee of security, convertibility or value,” said Hlengani Mathebula, head of group strategy and communications at the SARB.

“The South African Reserve Bank (SARB) is actively monitoring the developments around virtual currencies to inform any future regulatory approaches that may become necessary within the South African jurisdiction,” Mathebula said.

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South African banks Bitcoin-shy