South Africa Bank prevents customers from buying crypto on Binance, Exchange rejects allegations

A South African bank, Absa, has reportedly blocked the use of its credit cards for users buying cryptocurrencies on international exchanges, according to a media report. The claims come after customers of the financial institution reported they had received an SMS informing them of the suspension of online payments to the leading crypto exchange Binance.

Binance’s alleged failure to comply with South African regulations

According to a Mybroadband report, Absa’s Private Banking Contact Center initially suggested that the new measures, which are believed to have entered into force on June 18, 2021, were implemented because Binance “failed to comply”.

Reports of Absa’s blockade of foreign purchases of cryptocurrencies come just weeks after South Africa’s Intergovernmental Fintech Working Group (IFWG) published its new position paper on crypto assets. In this latest document, the IFWG recommended that South Africa should now consider regulating cryptocurrencies.

Meanwhile, Binance, which claims to be in full compliance with all current crypto regulations in the Africa region, has dismissed claims that it does not. Instead, the crypto exchange suggests that the blockade could be linked to the South Africa Reserve Bank’s foreign exchange rules. According to the report, Binance said:

The ban on user transactions / cards could be related to [the] South African reserve bank [SARB] Regulation and foreign exchange regulations.

Return of value via crypto prohibited

In fact, the SARB confirms on its website that cryptocurrencies are not legal tender and that their financial control department “cannot approve any such transaction”. The central bank also adds that “the return of value to South Africa through crypto assets as part of an individual’s individual discretionary and / or foreign capital exemption is not permitted”.

Meanwhile, after previously saying that its retail customers could freely participate in all cryptocurrency deals with their credit or debit cards, an Absa spokesperson said it was now “not allowed” in South Africa. Nonetheless, the spokesman told Mybroadband that the investigation is “an industry matter, not Absa-specific, and we encourage you to contact SA Reserve Bank for a fuller view”.

At the time of publication, Mybroadband said it had received no feedback from SARB on its request.

What do you think of Absa’s decision to discourage customers from buying crypto assets on Binance? Let us know what you think in the comments section below.

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