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FNB to shut down cryptocurrency platforms’ bank accounts

Following a review of potential risks associated with these entities.
Image: Chris Ratcliffe/Bloomberg

First National Bank provided more insight on Wednesday into why it has given notice to cryptocurrency trading platforms in South Africa that it will shut their bank accounts.

Affected currency exchanges include VALR.com and Luno, though FNB hasn’t named any of the companies involved, saying it “cannot provide any information on specific bank accounts”.

Read: Karatbars swims in murky waters

In response to questions from TechCentral, an FNB spokesman said via e-mail: “FNB can confirm that it has given reasonable notice to terminate its banking services to virtual currency exchanges and intermediaries trading in virtual currency.”

It said the decision to terminate banking services to these entities does not apply to individual customers.

“FNB considers this to be a prudent course of action following a comprehensive review of the potential risks currently associated with these entities, particularly given that appropriate regulatory frameworks are not yet in place.”

Read: Crooks and crypto in SA

The bank did not respond to certain specific questions from TechCentral, including whether the decision was forced on it by the South African Reserve Bank or some other regulatory body — it’s understood that this is not the case — or whether the move was a response to the possible competitive threat that cryptocurrencies pose to the banking sector in the long term.

In an e-mailed statement, VALR.com CEO Farzam Ehsani confirmed that FNB communicated its decision with his company to discontinue banking services to the entire cryptocurrency industry, including all exchanges and other entities dealing or trading in such currencies.

‘In discussions’

“Our FNB banking facilities currently remain operational, and we are in discussions with FNB about the exact date of termination,” Ehsani said in the statement.

“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.”

According to VALR FNB’s decision appears to be an isolated case. “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,” Ehsani said.

“We are hopeful that future regulatory clarity will cause FNB to revise its decision, particularly in light of the increasingly favourable regulatory environment for the cryptocurrency industry that is emerging both in South Africa and abroad.”

In January, the South African Intergovernmental FinTech Working Group — made up of the Reserve Bank, the Financial Intelligence Centre, the Financial Sector Conduct Authority, the South African Revenue Service and National Treasury — issued a consultation paper on policy proposals for crypto assets.

This paper wants a regulated way forward for crypto-asset service providers in South Africa, Ehsani said.

In June, the Financial Action Task Force, a global standards-setting body of which South Africa is a member, issued “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers”, which similarly provides a regulatory framework for the new industry, he added.

Read: How cryptocurrency scams work

— (c) 2019 NewsCentral Media

This article was first published on TechCentral here, and republished with permission.

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Bitcoin clowns brag endlessly about how it can be used to enable money laundering, circumvent FICA, evade taxes and exchange controls etc etc. and then cry and make conspiracy theories when a bank does its duty and closes accounts due to regulatory risk.

The same people were celebrating when the gupta’s accounts were closed for the same reasons. Not very self aware this lot.

Brag? the USD is used for more illicit activities. Decentralised Finance is a solution to the regulatory risk OF the banks.

Banks are just trying to slow the competition. Bankless finance is already is full working operation – it’s literally only people older than 40 that don’t realise.

Arrogant, useless banks like FNB have been rent-seeking the economy using efficient oligopolies for decades. They will be competed out within the next decade – they realise they’re obsolete and trying to delay the slow moving trainwreck.

p.s. here’s a list of convicted bank crimes (ask yourself how many employees got fired for these crimes [hint: not many]): https://www.marketwatch.com/story/banks-have-been-fined-a-staggering-243-billion-since-the-financial-crisis-2018-02-20

So now you are upset because the same laws been applied to SA money from USD transactions are being applied to the exchange’s accounts.

Not a very self aware bunch are we.

Closing accounts isn’t regulation (it’s easier to monitor an open account for regulatory purposes).

Don’t mistake FNB’s words for their intentions. Don’t assume current laws are effective or efficient.

The outdated financial system is overdue developing – current systems are based on infrastructure from the 1980’s. Banks chose not evolve (at the expense of us customers) – now they will be forced to evolve.

Ask yourself why why inflation & yields are record low (the most negative yielding debt in history) and why central banks are at record high debt. Monetary policy is impotent. prove me wrong.

Surely if the cryptocurrency world is going to replace the banks they can do without the banks??

You don’t say. You are being deliberately obtuse to pretend that crypto is not being exploited for this.

The next decade banks will be gone. I lol’d heartily. There are less ways to spend a bitcoin in the real world or online today than there were 4 years ago. This is why you guys aren’t taken seriously. You have no concept of reality and slow adoption.

@Anything. Indeed, I’ve read a report somewhere (can’t find it now) which states that the adoption of Crypto globally is losing traction / waning.

Not the universal payment system it was intended to be. Why? Which one of the 1,600 cryptos will make it….many come and go. It’s a fragmented mess.

Defi is already running decentralised banking with record inflows, AUMs and transactions. But you’re quoting Bitcoin spending outlets?

Ask yourself why every new Samsung phone being made comes with an ethereum wallet. Or why >60% of fortune 500 companies are building on ethereum. Ask yourself why the worlds biggest banks (JP Morgan Goldman are building on Ethereum ..but FNB isn’t).

Then ask why the Chinese gov have created a digitised national currency.

Enjoy the transition.

@SAfrican.

Their hope is on Ethereum? Oh gosh, what if they’re wrong? Why not Ripple or Tether?

Where will BTC or ETH be in say 2025? Could be gone by then(?) Maybe the virtual world will evolved around Libra?

Anything. Congrats on being a conformist to an outdated, slow & expensive financial system. Sad that you show your ignorance of the workings of banks and the existing monetary system while the hard evidence of the industries huge shenanigans is readily available. Its Largely unpunished! To trade with LUNO one has disclose the legally required info. so there is a paper trail for the system to use. The blockchain is immutable,transparent, safer and faster to use and gives one back the freedom and privacy one expects in a ‘true’ democracy- which
does not exist. The system has been subverted many years ago and is controlled ‘for our own safety and protection’ we were led to believe! If this and all the regulations regarding the use of your money are good, why is the system unable to wipe out financial crimes in the world? Could it be that they are the worst offenders? Bitcoin and many other good cryptocurrencies are already really worthwhile opposition to the ‘the ‘system. Big money is acting this way because they know it will hurt their controlled business. Trouble is, they can slow down its adoption but the benefits for the whole world and mostly ordinary people are so good that they will not win. It’s a system who’s time has come,, even if it takes another 10+ years to be widely accepted. Rather educate yourself re the above and if you work for a bank be mindful of the trend, try to find a niche section within the system, or change careers.

Lol these fiat slaves kill me. You think a currency that is under control by the government and banks is good? You don’t even own your o n funds and they can be frozen at any time. You oh so powerful south Africa Rand is a weak currency to begin with not to talk about the inflation of about 7% so your money constantly gets weaker every single day.

What a stupid approach to new tech, unless they have plans themselves, which I doubt, they to busy dumping cash into their head office renovation in hell hole centre joburg. Most innovative bank my ass. No matter, well over a $ billion cleared on BTC chain alone yesterday and almost a 1k BTC(126 mil) traded on SA exchanges. Very interesting tech. Short FNB long BTC

You make the classic mistake of conflating “Bitcoin” with “new tech”

Bitcoin is a manifestation of product that uses the technology known as blockchain.

That is the same as saying that it’s stupid that they stopped making the Concorde because it was the first passenger jet to have awesome new tech to go supersonic.

The application of the technology is the problem. Not the technology itself.

Blockchain will be around for many decades. Cryptocurrency in its current form will shortly disappear.

ZAR based platforms such as Luno and VALR need sellers more than buyers. The SA market has relatively few sellers as only SA residents who are natural persons may acquire crypto using their offshore allowance. My guess is that FNB, the bankers to both Luno and VALR, has been operating on the edge with regards to allowing non-resident sellers of crypto to remit the ZAR proceeds received to their offshore foreign currency account. And that SARB has begun asking questions.

There is also repetitional risk to FNB. These platforms are unregulated and offer little in the way of protection of client assets. For example, the Luno platform is operated by Luno Singapore company yet client funds are paid into a Luno South Africa bank account. There is no indication as to whether this account is a trust account or their own bank account. Or whether they in fact hold your crypto despite your statement indicating so. You also do not know whether the platform is merely facilitating trades or actively trading against you. But hey, they FICA their clients so all is good!

I wonder if they will serve the same notice to the Luno shareholders? If there are risks associated with Luno – those risks should trickle through to the shareholders no?

100%. on the other hand crypto currencies are vastly superior to fiat on any dimension you care to name, and all the FICA rules accomplish is to frustrate honest customers while the Gupta’s, international drug rings, arms dealers and the like have no problem laundering funds through the formal banking system.

While I agree with the idea of free banking and free currencies, we will be naive to expect the regulators of the Fiat currency regime to give up their monopoly on money creation.

Banks are private businesses. Why will they support and enable the transfer- and payment systems of their crypto-competitors? The Reserve Banks represent, regulate and act as lenders of last resort to the private banks. Reserve Banks are members of the IMF, who is the lender of last resort to lenders of last resort. Why will the IMF allow competition into the monetary system if they have a government-protected monopoly?

If cryptocurrencies are successful and if it becomes an alternative to fiat currencies, then it will restrict the function of Reserve Banks and obstruct their influence on monetary policy. In order to fulfil their roles, Reserve Banks must have the power to devalue currencies. They cannot do this efficiently if there are alternative currencies in circulation. It is clear, therefore, that alternative currencies and payment methods are dead in the water.

A fatal flaw in your take is your assumption that all Reserve banks are made equal. That governments all work together. That fiat currencies are all legitimate. “the regulators of the fiat currency regime” lol dude, you sound like a conspiracy theorist. The worlds a big place, there are over 180 currencies in the world, its not either or. Bitcoin also more than 10 years old, how old must it be before people stop saying it “dead”? If people think crypto is stupid, dont use it, in the same way I dont use the Mozambican metical LOL

Did you read the article? This is an excerpt to refresh your memory:

“In June, the Financial Action Task Force, a global standards-setting body of which South Africa is a member, issued “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers”, which similarly provides a regulatory framework for the new industry, he added.”

If you want to call a “global standards-setting body” a conspiracy theory, then go ahead. You are entitled to have your own opinion, but not to your own facts. You probably are too young to have heard about the Basel Accord or the G20. Most probably you have never read any advisories or discussion documents from the IMF either. Then you wouldn’t have a clue about the new bail-in regulations. If you are blissfully unaware of these issues you will also be ignorant enough to believe in the future of crypto-currencies. Ignorance is bliss. Enjoy it while it lasts.

@CTExec.

Crypto also have plenty of flaws (versus the global money system that has evolved over centuries). Besides that there’s a fragmented mess of 1,600+ coins….BTC, ETH or others leading today, could disappear tomorrow…technology is dynamic.

A few more threats:
Crypto is not the same “price” for the same coin across the globe (e.g. take BTC…there are different values to 1BTC depending from country to country. Hmmm…now where did I see this phenomenon before? Have geeks not paid attention during economics class, to learn how exchange rates came about? (…and it’s sometimes at higher cost than the traditional bank).

Another existential threat is pressure from ‘climate change’ supporters. Blockchain/crypto mining is an unacceptably high energy consuming way to maintain currency. Once a Fiat-note is printed, it uses zero power to maintain it’s validity.

Another threat will come from Govts/treasuries/regulation….if the global crypto acceptance becomes so huge and commonplace, that tax-collections will suffer, laws WILL change. Then the FNB event of closing exchanges Fiat-accounts could be a forerunner of things to come.

Another crypto failure is the design intent of being free from central control. It’s anything except free of central control: cryptos are easier manipulated by whales / large players with huge processing power, than it is for anyone to manipulate any Fiat currency.

Geeks need to stop playing around and wasting time away with crypto & do something worthwhile like ensuring users don’t sit with half-baked software. Newly developed software will likely give you more compatibility & other issues than a 30-year old Alfa Romeo. And why are we still TYPING our messages from keyboards?…are voice-to-text perfected yet? Come-on geeks, get back to work!

I have a few niche market crypto currencies one of which is already been used by hundreds of banks. its called Ripple and XRP is their token.It is saving banks hassle, time and money while assisting greatly with their liquidity- all very fast & safely!
Don’t lump all crypto together there are even different systems to blockchain which can execute many thousands of micro-payments a second which will facilitate complete business Tx’s between machines, soon even order the new stock and pay for it. Throw in ‘smart contracts’and they could separate and pay direct into the wallets of all those involved in the ownership and production of a song or anywhere any other pre-agreed multi payments are required. All instantly,safely,accurately requiring no intermediaries and at only at a tiny cost. Much more interesting and useful applications are well on their way!!

I use crypto and love it. I wanted a way to be paid online and I do not want a credit card and never want one. The bank takes your money and makes more money with it and gives you a tiny cut. They then lend out the money at insane rates to people who cannot afford to pay it back. I have got many loan offers from banks trying to get me into debt. Tha is to bitcoin I am able to be paid online without the clutches of banks. I wanted to use PayPal bits it’s a pain to set up and they take massive fees. Other use I would need to wait to be paid by check which takes weeks. Wire transfers take days. Many payment methods can be reversed leaving me with no money for my efforts. Once I am paid in bitcoin the bitcoin is there. It’s mine and no-one can take it. I buy everything with crypto excluding bills and food. All entertainment is bitcoin and crypto bought. If you think you can’t spend it then you know very little. The volitile nature of crypto is amazing and people who ar bad as business and trading cry when they lose fiat value. Don’t buy bitcoin if you don’t use the technology. It’s not an investment it’s a technology. Also people who say mining wastes electricity… Where do your u think the processing power for bank transactions comes from? The government can bring them it notes as it pleases out of thin air. You cannot do this with crypto. There is a certain an unt of crypto. It cannot be freely created like fiat can be printed out. If you don’t like crypto keep your useless fiat rubbish. From at is dirty money. It’s disgusting. You know the germs on a note? Also drugs ar bought with fiat not crypto. And money laundering is done with from at since you need to be making dirty money in the first place. So you have dirty fiat money you try to hide on crypto. Disgusting. Keep your dirty criminal fiat money gains to your yourself. Money laundering and Terrorism make me lol so hard. It’s the dillusion of the American government. America always go overboard. Crypto is safer then fiat. If you’re u paid tax in crypto then no official can steal it out of curruption since every transaction is traced. Oh well let’s use fiat so we can further enable government curruption. Crypto is going nowhere. Say goodbye to what you know fait it’s time for you to die. This is a digital world it needs digital currency. Let’s not go back in time stay with the tech.

So luno will just transfer they’re money to another bank?

There are many ways to launder money….it’s been happening for decades, long before cryptocurrency was even invented. And banks and institutions have been party to this for just as long. Why now the sudden desire for protection?
Is it because the banks earn nothing from these secretive trades?

Cryptocurrency investment is no more risky than buying share shares on the stock exchange. They both involve the human element whether we admit it or not. With shares, you’re investing in trust that those connected won’t steal your money ( like Steinhoff, African Bank, Tongaat, Tigon VBS Bank to name a few! – funny that there are two banks featured in this list)

If you’re saying the banks are at risk because of cryptocurrency trades – not so.
If you’re saying that the banks can’t be party to assisting in potential money laundering, then all they have to do is ask for a tax number before transferring. We have to do this when we buy gold or foreign currency anyway.

Crypto currencies, like the Internet will not go away. Rather look for a way to regulate and secure the transaction for all involved.

By the way, I do not own any Cryptocurrency- I prefer to take my chances with the markets!

..at least “the markets” are REAL. Crypto is VIRTUAL.

Most things these days ar digital. Do you live in the 18000? This website is virtual ar you saying it’s worth nothing?

End of comments.

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