As popular as cryptocurrency is these days, it’s still a ways off from becoming a widely accepted form of currency. Unless you’re El Salvador. South African banks still approach the subject with caution and are quick to steer clear of anything they aren’t fully keen on. Standard Bank has decided that arbitraging falls into that category, and has now served account termination notices to several clients who offer the service.
Standard Bank’s Crypto Crush
In case you don’t know, arbitrage is the act of purchasing something in one area, then selling it in another, usually at a higher price. In this case, it would involve buying crypto from one exchange and selling it on another.
Now, it’s not a get-rich-quick scheme. It’s just a simple way to get (relatively) fast returns on investment. Several businesses in South Africa have sprung up offering to make use of a so-called ‘arbitrage gap’ in SA’s crypto market on behalf of its clients.
It’s these businesses whose Standard Bank accounts have been terminated, leaving them scrabbling to find out what to do next. Many have yet to disclose the matter to their clients.
Not every arbitrage operator has been affected though, leaving many to question what Standard Bank’s criteria for termination is. In a statement to MyBroadband, the bank seems to indicate that it evaluates clients on a case-by-case basis:
“In line with its legislative requirement to develop and implement a risk-based approach in managing client relationships, the Bank has established risk management principles against which all prospective and existing clients are continually evaluated and assessed.”