First National's cryptocurrency ban bucks payment-system trends

The South African bank's move comes as much of sub-Saharan Africa embraces emerging tech for new types of payment systems.

bitcoin behind bars > cryptocurrency ban or restriction
Travis Wolfe / Getty Images

First National Bank's move to shut down cryptocurrency-linked accounts in South Africa by March 2020 has come as a surprise in a region where businesses are in the global vanguard exploring alternative payment systems.

The decision will affect some of the virtual-currency industry’s larger platforms such as U.K.-based Luno as well as South Africa-based iCE3X and VALR.com.

FNB said it has given "reasonable notice" that it will end services to virtual currency exchanges and intermediaries trading in virtual currency.

"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," the bank said in a statement. The decision to terminate the banking services to the digital-currency platforms does not apply to individual customers, it said.

Nevertheless, the move is unusual. At present, none of the other big banks have divulged plans to follow in FNB’s footsteps.

To continue reading this article register now

Download CIO's Winter 2021 digital issue: Supercharging IT innovation