South African financial institutions will now be allowed to deal with funds linked to digital assets and shouldn't indiscriminately block all crypto clients, the country's central bank said.
Banks in the country "may act as a conduit for funds" tied to crypto asset service providers and "may play a role in customers wishing to purchase" or "receive payouts in fiat currency" in their bank accounts for the sale of crypto, the South African Reserve Bank (SARB) said in new guidelines published this week.
The guidance was released after some local banks previously moved to shut down accounts tied to crypto exchanges, citing exposures to risk. In the published document, the SARB said it was aware that certain banks in the country have blocked clients with links to crypto. It added that although thorough risk assessment is necessary, the "wholesale termination of client relationships" poses a threat to financial integrity.
"Risk assessment does not necessarily imply that institutions should seek to avoid risk entirely," the SARB said.
In June 2021, some banks in South Africa also blocked customers from using their credit and debit cards to purchase crypto on foreign exchanges, while the central bank warned existing regulations didn't allow "for cross-border or foreign exchange transfers for the explicit purpose of purchasing crypto assets."
South Africans, however, are allowed to use their annual "single discretionary allowance" of up to 1 million South African rand (about $59,000) or foreign capital allowance of up to 10 million rand ($580,000) to buy crypto.