SARB deputy governor Kuben Naidoo has reportedly said that the new rules would be put in place in Q1 2020. With these rules, the central bank would put restrictions on how much local currency (rand) can be sent outside South Africa.
At present, South Africans are limited to a total of 11 million rand (~$750,570) to send across the border – 1 million rand (~$68,225) without declaration and 10 million rand (~$682,285) with special application to the South African Revenue Service.
This leaves cryptocurrency as the most popular method of sending money anywhere in the world, but the central bank’s plan to put restrictions is “far reaching and alarming,” said SA Crypto, South Africa’s blockchain community, adding:
“Conservative regulations would not only hinder innovation in South Africa, but repel investment into the country.”
The banks Throw a Punch at Cryptocurrency
Local banks in South Africa have also started clamping down on cryptocurrency firms. Just two weeks ago, First National Bank (FNB) said that it will stop serving major local cryptocurrency exchanges, including Luno, ICE3X, and VALR, after considering its “risk appetite.”
“We can confirm that FNB has decided to close our account with effect from end March 2020, along with other crypto exchanges in South Africa,” Luno Africa general manager Marius Reitz told local news outlet MyBroadband, adding: “We do not anticipate any impact to our existing customers as we have other banking relationships in place to support deposit and withdrawals on the platform.”
ICE3X, on the other hand, told the news outlet that FNB’s move is “conservative” and that it looks forward to “more clear guidelines” from policymakers in South Africa.
SARB’s plan to bring in new rules comes at a time when Africa has seen increased cryptocurrency interest. Just last month, peer-to-peer bitcoin trading platform Paxful said it added 800,000 wallets in the past 12 months, driven by growth in African countries – Nigeria, Ghana and Kenya.
Jack Dorsey, CEO of Twitter and payments company Square, has also set his sights on Africa. He recently said that the continent will “define the future (especially the bitcoin one!). Not sure where yet, but I’ll be living here for 3-6 months mid-2020.”
Bitcoin’s Lending Hand to Africa
Part of the potential that Bitcoin offers is its ability to be an option for those who find themselves unbanked. Due to the vast rural population in these countries, and the limited access to banks, many citizens miss out on the opportunity to use banking services. This is where Bitcoin can be a viable alternative.
More so, blockchain technology has also been looked at as a way in which to boost financial inclusion through creating a digital identity – another aspect that stops many South Africans and Nigerians from being able to open a bank account.
In November, South Africa topped Google Trends in the search of Bitcoin. The related searches center around ‘Ladysmith Bitcoin,’ and ‘Sgumza Bitcoin,’ which centers around an alleged Bitcoin scam in the rural town of Ladysmith called “Bitcoin Wallets” run by Sphelele’ Sgumza’ Mbatha, who is on the run from the South African police.