FNB moves to shutdown cryptocurrency-linked bank accounts

Date:20 November 2019 Author: Leila Stein Tags:, ,

First National Bank have decided to shutdown cryptocurrency-linked bank accounts.

“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,” they explained in a statement.

While this is a first for South Africa, international banks are becoming weary of working with cryptocurrency exchanges. This year, Barclays in the UK ended its partnership with Coinbase, a significant cryptocurrency exchange. According to Reuters, large banks have been reluctant to do business with companies that handle cryptocurrencies because of concerns they are used for criminal activities.

Those effected by this decision include South African cryptocurrency exchanges such as Luno, VALR and ICE3X.

“We can confirm that FNB has decided to close our account with effect from Q2 2020, along with other crypto exchanges in South Africa,”said Marius Reitz, Luno’s GM for Africa. “We do not anticipate any impact to our existing customers as we have other banking relationships in place to support deposit and withdrawals on the platform.”

Farzam Ehsani, CEO of VALR, took to Twitter to conduct an AMA (ask me anything) about FNB’s decision. Ehsani had previously worked with FirstRand Group as their blockchain lead. In the livestream, he expressed disappointment with this move by the bank.

“I unfortunately think its a step backward for South Africa from the perspective that one of our largest banks are making this move,” he said. But both Ehsani and Reitz did acknowledge that this decision has only been taken by FNB and not replicated so far by any other banks in the country.

Image: YoMzansi/Twitter

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