South Africa wants to regulate crypto with laws from 1933 and 1961
South Africa’s two largest crypto exchanges have welcomed finance minister Enoch Godongwana’s plan to regulate crypto assets under the country’s capital flow management regime.
VALR and Luno both cautioned, however, that the new framework must account for the unique nature of digital assets and avoid stifling innovation.
VALR CEO Farzam Ehsani and Luno country manager Christo de Wit responded to the recent Budget Speech announcement, raising questions about how decades-old legislation will govern Internet-native assets.
Godongwana said during his 2026 Budget Speech that draft regulations would be published under the Currency and Exchanges Act to govern crypto assets within the cross-border movement of capital framework.
The announcement was widely expected after a Pretoria High Court ruling in May 2025 found that cryptocurrency was not considered money for the purposes of South Africa’s Exchange Control Regulations.
That ruling effectively meant crypto transfers offshore did not require South African Reserve Bank (SARB) approval, though it is suspended pending SARB’s appeal to the Supreme Court.
Ehsani said VALR welcomes appropriate regulation that fosters responsible innovation and puts the public interest first, but highlighted a fundamental challenge with the existing legal framework.
The Currency and Exchanges Act dates back to 1933, and the current Exchange Control Regulations were promulgated in 1961 — both predating the Internet and personal computers by decades.
“One of the challenges we will face as a nation if we are to preserve these regulations is how to define ‘on-shore’ and ‘off-shore’ for crypto assets,” Ehsani said.
Crypto assets exist on globally distributed public ledgers as native internet assets, which Ehsani said made the traditional onshore-offshore distinction inherently difficult to apply.
He said South Africa has, to date, provided one of the world’s leading regulatory environments for crypto assets, and expressed confidence that the country would continue with sensible regulation.
Mandela promised an end to exchange controls
“Ultimately, I look forward to a future that fulfils what President Mandela declared in his 1996 State of the Nation Address,” said Ehsani. Thirty years ago, Mandela promised to lift exchange control regulations.
“In order to improve the investment climate, our monetary authorities are reviewing, on an on-going basis, the timing and pace of lifting existing exchange controls,” Mandela said in his 1996 speech.
“For us, it is not a matter of whether, but of when, these controls will be phased out.”
Luno has long advocated that crypto be designated an onshore asset when traded through licensed South African crypto asset service providers.
De Wit said crypto assets are currently not clearly designated as either an onshore or offshore asset in South Africa, creating uncertainty for financial advisers and investors.
De Wit said this would mean investors using local platforms are not subject to offshore investment limits, which could encourage greater domestic investment in digital assets.
Onshore classification and stablecoins
Offshore assets are subject to capital allocation limits, which means the classification has direct consequences for investors allocating capital to digital assets like Bitcoin.
The designation could also progress discussions on locally traded crypto exchange-traded products and increase tax revenue for the fiscus, he said.
De Wit raised the growing importance of stablecoins for cross-border transactions, particularly for South African companies operating elsewhere on the African continent.
In some jurisdictions, firms struggle to access sufficient foreign currency to repatriate profits, and rand-backed stablecoins can bridge that gap.
The Reserve Bank would need to establish a clear reporting framework to ensure transparency and compliance for stablecoin-based fund repatriation, De Wit said.
Luno urged the SARB to amend its cross-border reporting framework to allow for the reporting of crypto asset inflows and outflows, including stablecoins.
De Wit said South African businesses experience extreme delays and high costs when conducting business in emerging markets, particularly when they need to repatriate funds.
A properly designed stablecoin framework could support capital inflows into South Africa, strengthen local companies with African operations, and grow the tax base.
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