South Africa’s crypto community has expressed significant frustration following Capitec Bank’s recent decision to restrict electronic fund transfers (EFT) to cryptocurrency exchanges. The bank, which claims the measure is aimed at protecting clients from fraud, is instead urging customers to use its Capitec Pay app as an alternative—a move that many see as costly and limiting for crypto users.
Crypto Community Reacts with Dismay
Capitec’s announcement has ignited a backlash among cryptocurrency users and service providers, with many voicing their concerns over the implications of this restriction. For those accustomed to using affordable EFTs to move money into their crypto accounts, the shift to Capitec Pay represents a considerable price hike, with transaction fees soaring to 1% of the transfer value, and potentially up to 1.4% when additional service provider costs are included.
Farzam Ehsani, CEO of crypto exchange VALR, expressed his frustration on social media platform X, highlighting that such a move contradicts the global trend of making payments cheaper and more accessible. He argued that Capitec Pay adds unnecessary expense, especially at a time when exchanges have invested heavily in securing their licenses as Crypto Asset Service Providers (CASPs).
Capitec’s Justification: Fraud Prevention
In a statement, the bak justified the restrictions by pointing to its commitment to safeguarding clients from fraud. The bank stated,
Capitec is committed to protecting our clients from fraud, which is why we made the decision to block EFT [electronic funds transfer] and immediate (Real Time Clearing) payments to crypto exchanges on our app and business web interface. We recognise the increasing interest in cryptocurrencies and encourage users to utilise Capitec Pay as a secure alternative.
The bank further added that it is actively working with crypto exchanges to integrate Capitec Pay into their platforms to expedite the process.
Customer Rights and Revenue Motive
Critics argue that the bank’s move goes beyond fraud prevention and infringes on customers’ basic rights to spend their money as they see fit. Ehsani pointed out that other South African banks continue to allow customers to fund their crypto accounts without imposing such restrictions, suggesting Capitec’s decision is disproportionate to the actual fraud risks.
He also argued that a more appropriate response would have been to educate clients through pop-ups and warnings, rather than restrict their financial autonomy.
Some within the crypto community view the bank’s actions as an attempt to increase revenue by steering customers toward the more expensive Capitec Pay app, especially as the adoption of cryptocurrencies continues to grow in South Africa.
The Impact on Crypto Exchanges
The restrictions have already prompted responses from major crypto exchanges operating in South Africa. AltCoinTrader, for instance, was directly impacted by the changes but swiftly integrated Capitec Pay into its platform in collaboration with the bank’s technical team. Richard da Souza, CEO of AltCoinTrader, noted that while the restriction was an inconvenience, a solution was found in record time.
Other exchanges, such as Luno, took proactive measures by informing Capitec customers of alternative payment options like cards or switching banks to continue funding their crypto transactions. VALR announced that, while it is open to future integration with Capitec Pay, the current priority is working with other banks to provide more cost-effective solutions for its users.
Also read: Capitec Bank Blocks Crypto Payments Amid Fraud Concerns, Draws Industry Criticism
Crypto-Friendly Banks and the Way Forward
In contrast to Capitec’s move, TymeBank has positioned itself as a crypto-friendly institution, offering services that support the transfer of funds to CASPs. Chris Becker, managing executive at TymeBank, emphasized that the bank has no intention of limiting customer freedom and aims to make crypto transactions easier over time.
Meanwhile, some industry experts, like Frank Leonette, founder of compliance service GloRep, acknowledge that while Capitec’s decision is “understandable” for now, it may ultimately hurt legitimate investors due to the higher transaction fees. Leonette also expressed doubt that the restriction would significantly curb fraud, as scammers typically exploit vulnerabilities in the banking system, not necessarily on crypto exchanges.
Customer Dissatisfaction Grows
Crypto influencers and venture capitalists, such as Brenton Naicker, have urged Capitec customers to voice their dissatisfaction with what many are calling an “Orwellian prescription” on how individuals can spend their money. There is growing sentiment among crypto advocates that banks should not dictate customer choices in such a restrictive manner.
Additionally, some speculate that crypto exchanges themselves may consider launching their own banking services to bypass traditional financial institutions entirely. VALR’s CEO Farzam Ehsani hinted at this possibility, suggesting on X that “perhaps VALR should consider becoming a bank in the future.”
