South Africa Rethinks Its Cross-Border Crypto Rules After Industry Pushback
The government plans to abandon strict pre-approvals in favor of transaction legitimacy and tax compliance assessments.
Table Of Content
TL;DR
- South African regulators are rethinking proposed cross-border crypto rules after industry pushback.
- Finance Minister Enoch Godongwana confirmed the shift during his Medium-Term Budget Policy Statement following thousands of public comments.
- The government plans to abandon strict pre-approvals in favor of transaction legitimacy and tax compliance assessments.
- Revised draft rules will align with Financial Stability Board international recommendations.
The South African Minister of Finance, Enoch Godongwana, says the South African Reserve Bank (SARB) and National Treasury’s plan for cross-border crypto rules needs a rewrite.
The Minister gave his Medium-Term Budget Policy Statement (MTBPS) on Wednesday, October 21. While addressing Parliament, he noted that SARB and the National Treasury had received “thousands of comments” regarding the proposed rules.
“It is clear,” Godongwana said, “that we need to take a different approach to these amendments. We must aim to shift away from pre-approvals.” “Instead,” added, “we must assess transactions for legitimacy and tax compliance.”
This shift comes after months of growing friction between regulators and South Africa’s digital asset industry.
What The Draft Proposed, and Why the Industry Pushed Back
South Africa’s National Treasury first indicated in February that it wanted to fold crypto into the capital flow framework. Regulators expressed concern about South Africa’s cross-border crypto transactions and the potential for them to sidestep exchange controls.
SARB highlighted the estimated R63 billion that had moved from South African crypto wallets to foreign wallets since January 2019 as evidence for this concern.
By April 17, regulators published a draft Capital Flow Management Regulations. The draft would replace the 1961 Exchange Control Regulations. The draft would require buyers to declare when and how they acquired crypto and where it is held, and it would include search-and-seizure powers and penalties of up to R1 million and five years in prison.
In August, regulators published an additional manual on crypto assets. According to the manual, individuals could send crypto offshore through licensed providers within their R2 million discretionary or R10 million foreign capital allowance.
It also allowed individuals to move funds from regulated exchange wallets to self-custody wallets but not back. The rules prohibit corporate entities from moving crypto to or out of the country.
The Industry Pushback
In June, Luno CEO James Lanigan warned that the proposed capital flow management regulations could restrict South Africa’s participation in the $33 trillion stablecoin economy. VALR CEO Farzam Ehsani called for the abolition of exchange control rules and asked that regulators replace them with modern reporting and supervision frameworks.
After the crypto asset manual was released, the industry united. On September 9, VALR, Luno, AltCoinTrader and EasyEquities launched an industry coalition called CATASTROPHE.
The coalition’s petition received over 6500 signatures from individuals and garnered support from over 220 organisations. The coalition’s request was simple: they wanted fairer rules. They believed the rules would push innovation and investment offshore. The coalition also feared it would move activity underground and freeze legitimate work.
VALR CEO, Farzam Ehsani, also said the proposed rules threatened at least R2.2 billion in foreign investment in South Africa’s crypto industry. SARB had responded to the coalition, saying that its approach was not yet settled.
Why the stakes are high: South Africa’s cross- border footprint
Chainalysis’ 2026 Global Crypto Adoption Index, covering July 2025 to June 2026, ranks South Africa third in the world for cross-border crypto flows. The country also ranked number 9 in the Grassroots Crypto Adoption Index. The country is also 22nd on Chainalysis’ institutional “Big Money” index,
South Africa’s ranking rests on the very activity the drafts targeted. Closing corporate cross-border rails would hit that directly.
Aligning with Global Standards: The FSB Factor
A vital component of Godongwana’s announcement was the acknowledgement of international regulatory benchmarks. The finance minister emphasised that the future “treatment of crypto assets in South Africa must be guided directly by recommendations from the Financial Stability Board (FSB).”
The FSB recently warned G20 economies about cross-border stablecoin risks and regulatory fragmentation. South Africa’s desire for alignment helps ensure local rules do not isolate the country from global liquidity pools.
What Comes Next for South African Crypto Players
The industry has warmly welcomed the government’s openness to rethinking its approach. Farzam Ehsani described it as “welcome news for all South Africans.”
He shared on X that he believed that regulators “will find the right, principled framework…one that protects our financial system while enabling innovation and positions South Africa as a leader on the world stage.”
However, uncertainty remains. Godongwana did not provide a hard timeline for the release of the revised second draft. He did, however, say consultations for the second draft will begin.
