A Bank In South Africa Sends Account Termination Notices To Its Crypto Client

It has been reported that the prominent South African bank sent notices to several of its crypto clients to terminate their respective accounts. According to the native media, the notices were served by Standard Bank to those providing services regarding Automated Crypto Arbitrage. The report mentioned that digital currencies such as Bitcoin are trading at a higher level across the exchanges in South Africa as opposed to the other places. This is like the “kimchi premium” concept witnessed in South Korea. According to the reports, the actions of Standard Bank shuddered the industry of cryptocurrency throughout the country. The reason behind this is that many businesses had been taking benefits out of the mentioned “price gap.”

Nonetheless, it is of great importance that all businesses are not having equal profits from the opportunities of arbitrage provided in the world of cryptocurrency. Numerous factors such as withdrawal charges and scale economies determine the profit to a large extent. Additionally, the report pointed towards the rarity of regulations about the permitted amount of money to be sent offshore by the residents of South Africa without any approval from the country’s central bank.

A supposed clampdown?

Carel de Villiers, the co-founder of Shiftly, stated that a decline has been pronounced by the Standard Bank regarding the application for opening accounts as well. It mentioned that there is no requirement for the lenders to bank with firms having a model for arbitrage model. However, he accused that there are some relationships between the bank as well as its competitors. Sean Sanders, the founder of Revix, was referred in the report saying that the crypto players have an astronomically high banking risk without regulation.

The report indicated the scenario as a clampdown over the crypto industry by the Reserve Bank of South Africa. Nevertheless, the allegations have been denied by the bank. It stated that the Standard Bank is determined to deal fairly with its consumers and consistently struggles to make an adequate balance between them with guaranteeing regulatory compliance.

The reason behind South Africa’s possession of such arbitrage opportunities

Prices work as a result of supply and demand in the local exchanges. A report by Chainalysis had previously specified that among the prominent grassroots adoption is taking place in South Africa as compared to the global scenario. Furthermore, in 2021, an upsurge of more than 1200% in terms of value has been witnessed in the market of the country in comparison with the previous year. Thus Bitcoin has a higher price in the vicinity of South Africa.