TechFlow news: Kraken's refusal to accept deposits from South African users caused a temporary spike in cryptocurrency premiums on South African exchanges, reaching as high as 3.5%. South African crypto experts linked this to the Financial Action Task Force (FATF) placing South Africa on its gray list.
It was reported that U.S. cryptocurrency exchange Kraken decided to halt deposit services for South African users, leading to increased premiums on crypto assets such as Bitcoin.
Previously, the price difference (arbitrage spread) of crypto assets between global and South African exchanges typically ranged between 0.7% and 1.5%.
Kraken's move is believed to stem from its banking partners blacklisting South Africa due to anti-money laundering concerns. Local crypto arbitrage market participants were affected but have since found alternative solutions. Some crypto arbitrage and foreign exchange experts stated they did not use Kraken and thus remained unaffected. They noted that exchange-imposed trading limits tend to drive up arbitrage premiums, which presents an opportunity for those not reliant on Kraken.
Kyle Dowie, co-founder of another crypto arbitrage provider Dooya, said in the same report that Kraken’s decision caught many participants off guard. However, he suggested that once Kraken announces new local banking partners, the arbitrage premium will eventually decline.
