The last time I talked about Binance, one of the world’s most popular crypto exchanges I was complaining about how they didn’t seem to want Zimbabweans on their platform. Now it seems South African’s are having trouble buying cryptocurrencies using their Visa or MasterCards on the platform as well. But, a cursory investigation has revealed that this time it’s not Binance who are causing this-it’s the South African Reserve Bank (SARB).
According to the SARB, South Africans are not allowed to conduct cross-border transactions for the purpose of buying cryptocurrencies. They are also not allowed to use foreign currency to buy crypto-currencies. The last one is also significant because in most instances the prices of cryptocurrencies are quoted in USD and often one needs to convert their Rands into USD before they make a payment. It’s a process that is usually handled automatically and behind the scenes by banks and platforms like Visa and MasterCard.
That’s no longer possible
The rules are not really new, they have been there for a while but South Africans were still able to sign up for platforms like Binance and Coinbase and proceed to buy cryptocurrency using their South African issued Visa and MasterCards but that recently changed. Those attempting to do so now will get an error that says the card has been declined by the issuing bank.
Individuals who tried to make a purchase also immediately received an SMS from their bank telling them the attempt to make the purchase had been declined. For example, one person who banks with the Barclays Affiliated Bank, ABSA got the following SMS.
Absa: Temporary lock enabled for online purchases on credit card ending with xx[actual last four digits here]. You can deactivate it via Absa Online, the [Absa] Banking App or by calling the number at the back of your card for help. Auth FSP/NCRCP7.
A message shared on Mybroadband forums by one Absa user who tried to buy Crypto.
Messages like this one are not unusual as they are normally sent out by banks when they detect suspicious activity on your card. For example when you try to make a purchase in Ukraine when you have never done so in the past. Usually, if it’s really you, you can just open the bank’s app and lift the block or get in touch with their call centre and ask them to lift the block.
Instead this time those who tried to lift the block didn’t see anything in the banking app to suggest there was a block. Upon getting in touch with ABSA’s call centre they were in for a surprise the bank informed them they were not allowed to buy crypto using their cards:
“In line with the country’s exchange control regulations, purchasing cryptocurrencies on debit and credit cards is not permissible in South Africa.”
“Given this is an industry matter, and not ABSA specific, we suggest you approach the SA Reserve Bank for a more comprehensive view.”
What an ABSA spokesperson had to say on the issue.
As already pointed out the SARB already has rules on cross-border buying but it’s the bank’s response that’s rather surprising. It seems to imply that using your card to buy cryptocurrencies is not allowed even in South Africa which means even on platforms like Luno which are technically local even though they too have been moving their HQs to outside South Africa to avoid a Golix like scenario where the SARB can decimate them the same way the RBZ stomped Golix out of existence.
Just to confirm this is true, a few tests using an FNB card shows that the FNB card can also not buy crypto on Binance. I am not clear on whether you could do this before or this is also a recent change or whether it’s just the card I tested with.
Governments don’t like Cryptocurrencies
A lot has changed when it comes to cryptocurrencies. They are now more mainstream than ever but it seems one thing hasn’t changed-governments and their surrogates such as central banks hate them. The Chinese government recently ordered its banks to not support cryptocurrencies.
The RBZ after embracing cryptos ordered banks to stop facilitating crypto transactions and brought about the end of Golix. Now they seem to be warming to the idea and want Fintech companies to use their sandbox. The Central Bank of Nigeria busy waging a war against cryptos too. In Kenya, cryptos are not banned but if you pay someone using crypto-currency and it may come back to bite you as they are not legal tender. Only Tanzania seems to be warming up to the idea of a crypto world.
Ostensibly governments give reasons such as volatility and use in criminal activities to justify their bans and regulations but it’s also because at their heart most coins don’t rely on centralised processing and take away the ability of governments to print money as they please.
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