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Top cryptocurrency news: South African Reserve Bank encourages friendly behavior with crypto

19-Aug-2022 By: Sudeep Saxena
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The Reserve Bank of South Africa's Prudential Authority issued guidelines to its subsidiaries in an effort to avoid illegal activity, asking banks not to terminate all ties with cryptocurrency. It suggested that such an act may pose a higher risk in the long term.

The official notification was signed by Prudential Authority CEO Fundi Tshazibana. Previously, several South African banks severed ties with crypto asset service providers (CASPs), as they are referred to in the document, due to unclear rules or a high-risk component.

However, the notice emphasizes that risk evaluation does not imply abandoning cryptocurrency entirely:

"Risk assessment does not always imply that institutions should strive to remove all risk, such as by discontinuing client relationships that may include CASPs." 

It goes on to argue that such a move may even constitute a "threat" to general financial integrity since it could limit the options for dealing with concerns like money laundering.

In late July, the Reserve Bank issued a risk assessment of the local banking system. According to the report, “cryptocurrency and virtual assets were among the top ten threats identified by the leading local banks.”

Prior to the report, the South African government announced an intention to classify cryptocurrency as a financial asset for regulatory purposes. The categorization laws are likely to be enacted within the next 12 months.

South African cryptocurrency exchanges welcomed this announcement. Many individuals feel that this measure will enhance the country's adoption rate. The country has seen a surge in interest and development in the cryptocurrency ecosystem, including "in real life," crypto use cases.

South Africa is home to crypto ventures such as Bitcoin Ekasi, a township that introduced Bitcoin to help local underprivileged people achieve financial freedom and Unravel Surf Travel, a South African-based pro-crypto travel company.

Read also: Insider trading at Coinbase, according to new research

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