The South African Reserve Bank’s Prudential Authority (PA) has issued a guidance note to banks encouraging them to provide banking facilities to crypto exchanges. 

The note to banks and other financial institutions was penned by PA CEO Fundi Tshazibana.   According to Tshazibana, banks outright terminating cryptocurrency companies’ accounts additionally threatens monetary integrity generally.

As a result, the regulator encouraged banks to evaluate risks on an individual basis rather than completely shunning cryptocurrency-related businesses.

Tshazibana’s guidance note comes after First Nationwide Bank (FNB) closed accounts for the major cryptocurrency exchanges in South Africa, including Luno and VALR, in March 2020. In November 2019, it informed them.

 VALR CEO Farzam Ehsani lauded the guidance note calling it a great step forward for crypto in South Africa, and for the banks themselves.

He said, “The authority has realised it is time to bank crypto companies.”

Tshazibana’s note also notes that risk assessment by the banks does not necessarily imply that institutions should seek to avoid risk entirely (also known as de-risking), for example, through wholesale termination of client relationships that may include CASPs.

This announcement comes after Binance CEO “CZ” Changpeng Zhao echoed this view in a recent interview with MyBroadband.

Zhao stated that though it sounds counterintuitive, working with cryptocurrency exchanges, and licensing them to operate is better for regulators than making an attempt to dam them.

He additionally stated one of the simplest ways international trade monitoring boards can implement foreign money controls is to permit banks to work with cryptocurrency exchanges.