South Africa is slowly turning out to be a fertile ground for its crypto industry to bloom. The country is one of the prime hotspots of Africa’s thriving crypto community. A major part of the South African population has turned towards crypto to find a way around economic complications.
The nation has also seen a spike in interest regarding bitcoin searches over time. Back in July 2019, Bitcoin searches hit an all-time high score of 100 where it was just 50 in 2018. The country radiates so much crypto potential that Twitter CEO Jack Dorsey, decided to live there for six months. Dorsey had said that Africa will play a huge role in defining the future of Bitcoin.
However, the regulators aren’t pleased with the fact that cryptocurrencies could be used for illicit activities. They have been clamping down on it with their regulatory constraints. South Africa is no stranger to this matter.
Last month, one of the biggest banks in the African region, First National Bank (FNB) cracked down on their customers who were dealing with cryptocurrencies using their bank accounts. This was bad news for all crypto businesses, especially exchanges. The country’s leading exchanges Luno, ICE3X, and VALR were notified by a letter from FNB. A part of the letter reads:
“FirstRand Bank has been considering its risk appetite in respect of virtual currencies and virtual currency exchanges for some time. Within this context the Bank has taken the decision to discontinue the provision of banking services to virtual currency exchanges and/or entities dealing/trading in virtual currency.”
Prior to this the South African Reserve Bank (SARB), the country’s central bank had made it clear that it will keep cryptocurrencies under a close watch. Recent reports state that the SARB is now close to introducing new crypto regulations to keep them from being used for illicit activities.
The regulations are set to be in place by 2020 according to SARB deputy governor Kuben Naidoo. This would levy restrictions on the total amount of money, individuals and companies could send in cross border payments for foreign investments. At present, it is 1 million rand ($68,285) without declaration and 10 million rand ($682,285) with a special application addressed to the South African Revenue Service.
These economic hurdles have forced locals to turn towards cryptocurrencies while opening up doors to thousands of blockchain start-ups. This has also resulted in keeping the price of Bitcoin at a premium level compared to international prices in US Dollar.
The news has been a slap in the faces of crypto enthusiasts in the region. Despite this, the community hasn’t given up and is fighting to push crypto towards the mainstream. With the advent of cryptocurrencies, millions of unbanked have been banked. If the popularity of crypto keeps going up, the emerging technology would soon be able to solidify the foundation of the African economy that is growing weaker with each passing day.