South Africa's crypto progress is on the line

is south africa rewriting its exchange-control rulebook for the first time in more than 60 years — and the country's crypto industry fears the new arrangement will push it back, not forward.

Gazetted on April 17, the National Treasury's draft Capital Flow Management Regulations will replace the 1961 apartheid-era exchange control regulations and, for the first time, will formally bring crypto assets within South Africa's capital flows framework. Treasury says the overhaul brings South Africa into line with OECD and Financial Action Task Force recommendations to combat money laundering and illicit financial flows.

But the country's two largest licensed cryptocurrency exchanges – VALR and Luno – have warned that the draft, in its current form, could reverse years of progress in building a regulated digital asset industry and undermine South Africa's position as a fintech leader on the continent.

The public comment deadline, originally June 10, has been pushed back to May 18, narrowing the window for industry feedback on the 60-year-old regulatory rewrite.

according to valr And LunoWhile the intention to modernize exchange controls should be welcomed. Execution, on the other hand, is not.

“South Africa has long been a global leader in forward-looking crypto regulation,” VALR CEO Farzam Ehsani said in e-mailed comments to TechCentral. “While these draft rules attempt to transform and modernize exchange controls and bring crypto assets into the capital flow management framework, there remain areas of major concern.”

'A worrying document'

Ehsani described the draft as “a dangerous document,” pointing to provisions that give national treasury and enforcement authorities sweeping powers to search and seize currency, crypto assets, gold or securities suspected of violating the rules. He said this would likely extend to phone searches for crypto apps at airports and other points of exit. The draft also requires every buyer of a crypto asset to make a written declaration as to when and how it was acquired and where it is kept. Violations are punishable by a fine of up to R1 million and up to five years in prison.

Reading: Reserve Bank identifies crypto as a potential risk to fiscal stability

Ehsani said he was surprised by the direction of the trip. In his 1996 State of the Nation address, then-President Nelson Mandela promised to phase out exchange controls, calling it a matter of “when, not if”. The US, UK, Singapore and other peer economies have since done so. “Why do we insist on preserving these destructive policies at the expense of our economic growth, prosperity and progress?” he asked.

Marius Reitz, Luno GM for Africa and Europe, agrees.

“While we support the move to reform the outdated exchange control framework, the current draft presents significant obstacles that could hinder South Africa’s momentum as a global fintech leader,” he said.

Reitz said the draft represents the first major change to exchange controls in six decades and warned that the comment window has been narrowed, pushing the deadline from June 10 to May 18. Luno will still submit a full response, he said, but believes thorough consultation is important given the scope of the changes.

Both crypto exchanges took direct aim at the draft's treatment of onshore crypto activity. Reitz said that under the draft transactions between South African residents on locally licensed exchanges would be treated as capital exports regardless of whether they leave the country.

“Luno mandates that crypto assets held within the South African CASP (Crypto Asset Service Provider) ecosystem should be designated as onshore,” he said.

Ehsani raised questions regarding rand-denominated stablecoins and tokenized native assets. If every crypto asset is a foreign asset by default, then “will these South African assets be classified as foreign assets because they exist on the blockchain?”.

The absence of a “fixed limit” – a figure repeatedly mentioned in the draft but never provided – drew criticism from both sides. Reitz said the omissions create serious problems for professional trading firms, which could see a drop in volume and liquidity without any specific arrangements in place. Treating all crypto assets the same, regardless of whether they are used for investments or as utility tokens, could also deter investment in non-financial blockchain applications, he said, as developers would also need permission from the national treasury.

critical moment

“In recent budget speeches, Treasury's stated intention has been to modernize and liberalize our exchange control system,” Reitz said. “We fear these regulations will negatively impact the industry and create unnecessary red tape that will stifle economic growth.”

Reading: An inflection point for crypto in South Africa

The draft comes at a delicate moment for the local crypto sector. The Financial Sector Conduct Authority began licensing CASP in 2024 and adoption has accelerated since then. Discovery Bank partnered with Luno in November 2025 to offer crypto trading to customers. Bitcoin and stablecoin payments are now accepted at over 650 000 merchant outlets through Scan to Pay and Moneybadger. – © 2026 NewsCentral Media