South Africa is rewriting its exchange-control rulebook for the first time in more than 60 years – and the country’s crypto industry fears the new regime will set it back, not move it forward.
National treasury’s draft Capital Flow Management Regulations, gazetted on 17 April, would replace the apartheid-era Exchange Control Regulations of 1961 and, for the first time, bring crypto assets formally within South Africa’s capital flow framework. Treasury says the overhaul brings South Africa into line with OECD and Financial Action Task Force recommendations on combating 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 standing as a fintech leader on the continent.
The deadline for public comment, originally 10 June, has been brought forward to 18 May, compressing the window for industry response on a 60-year regulatory rewrite.
According to VALR and Luno, while the intent to modernise exchange controls is to be welcomed. The execution, on the hand, is not.
“South Africa has long been a global leader in forward-thinking crypto regulation,” said VALR CEO Farzam Ehsani said in e-mailed remarks to TechCentral. “While these draft regulations seek to replace and modernise exchange controls and bring crypto assets into the capital flow management framework, there are areas of major concern.”
‘An alarming document’
Ehsani described the draft as “an alarming document”, pointing to provisions that grant national treasury and enforcement officers broad powers to search and seize currency, crypto assets, gold or securities suspected of contravening the rules. He said this would presumably 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 of when and how it was acquired, and where it is held. Contraventions carry fines of up to R1-million and up to five years in prison.
Read: Reserve Bank flags crypto as a possible risk to fiscal stability
Ehsani said he is puzzled by the direction of travel. In his 1996 state of the nation address, then-President Nelson Mandela pledged to phase out exchange controls, calling it a matter of “when, not whether”. The US, the UK, Singapore and other peer economies have since done so. “Why do we insist on preserving these destructive policies at the cost of our economic growth, prosperity and progress?” he asked.
Luno GM for Africa and Europe Marius Reitz agrees.
“While we support the move to overhaul the ageing exchange control framework, the current draft presents significant hurdles that could stall South Africa’s momentum as a global fintech leader,” he said.
Reitz noted that the draft represents the first major overhaul of exchange control in six decades and warned that the comment window has been compressed, with the deadline brought forward from 10 June to 18 May. Luno will still submit a full response, he said, but believes a thorough consultation is vital given the scope of the changes.
Both crypto exchanges took direct aim at the draft’s treatment of onshore crypto activity. Reitz said transactions between South African residents on locally licensed exchanges would, under the draft, be treated as capital exports despite never leaving the country.
“Luno maintains that crypto assets held within the South African CASP [crypto asset service provider] ecosystem should be designated as onshore,” he said – a change he argued is essential if individuals and institutions are to invest locally without exhausting offshore allowances.
Ehsani raised the related question of rand-denominated stablecoins and tokenised local assets. If every crypto asset is by default a foreign asset, “would these South African assets be categorised as foreign assets because they exist on a blockchain?”.
The absence of a “determined threshold” – a figure the draft repeatedly references but never provides – drew criticism from both camps. Reitz said the omission creates acute problems for professional trading firms, which could see a drop in volumes and liquidity without a specific dispensation. Treating all crypto assets the same, regardless of whether they are used for investment or as utility tokens, could also deter investment in non-financial blockchain applications, he said, as even developers would need national treasury permission.
Delicate moment
“Treasury’s stated intention, in recent budget speeches, has been to modernise and liberalise our system of exchange controls,” Reitz said. “We fear these regulations will negatively affect the industry and create unnecessary red tape that will stifle economic growth.”
Read: An inflection point for crypto in South Africa
The draft lands at a delicate moment for the local crypto sector. The Financial Sector Conduct Authority began licensing CASPs in 2024, and adoption has since accelerated. Discovery Bank partnered with Luno in November 2025 to offer customers crypto trading. Bitcoin and stablecoin payments are now accepted at more than 650 000 merchant outlets through Scan to Pay and MoneyBadger. – © 2026 NewsCentral Media
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