Local press in South Africa noted that some of the country’s financial institutions have to suspend credit card services to those of their customers who were apparently purchasing digital currencies from crypto trading and exchange firms, which are usually foreign firms. A complaint was reported by a credit cardholder of a particular bank that he had transacted through his credit card at a foreign crypto firm, since then his credit card service is blocked.
Local media agency of South Africa, namely Mybroadband, noted that customers are denied the use of credit card facilities by their respective banks. The agency reported that Absa, which is a local financial institution, has informed that there is a change in the bank’s policy. According to the change, the bank will not facilitate any transactions with any crypto firms which fail to comply with the country’s rules and regulations. The change, according to Absa, was duly implemented on 18th June 2021 and since then has been applied in full force.
Absa’s contract center informed further that some of its customers were found involved in carrying out transactions through foreign firms i.e. Binance. The bank said that Binance is reportedly not following the rules and regulations framed by law through the government and financial watchdog. On the basis of this non-compliance, the bank was forced to suspend credit card facilities for the temporary basis of its customers.
It was the Intergovernmental Fintech Working Group (IFWG) of South Africa that issued new guidelines regarding crypto earlier. According to IFWG’s guidelines, the banks were asked to take action against customers who indulge in business with any foreign crypto firms that are non-compliant. The authority further requested the Government to immediately prepare crypto regulation for avoiding any future complications.
Meanwhile, when Binance South Africa was contacted and asked to give comments, the firm outrightly refuted the allegations. Instead, Binance South Africa claimed that it is an international firm having offices in multiple jurisdictions. Each jurisdiction has its own set of rules and regulations regarding crypto and all of them have been followed in letter and spirit by the firm. There is no exception at all, in any of the areas, including the African region, where the firm is not complying with any single rule or regulation.
It was furthermore suggested by Binance, if a bank’s customers are facing any difficulty, then Binance has nothing to do with this. It is a matter between a bank and its customer and there could be several reasons for the suspension of credit card facilities. However, one such possible reason could the apparent change incorporated in the foreign exchange manual. Again this is an absolute prerogative of the Reserve Bank of South Africa to do as they please but Binance has no role to play in this.