Proposed foreign exchange regulations risk locking South African businesses out of a fast-growing global payments system built on stablecoins.
There is also an outdated understanding of how digital money actually moves, say two of the country’s leading crypto executives.
In April, National Treasury proposed new foreign exchange rules governing the use and cross-border movement of crypto assets, including how South Africans buy, sell, lend and transfer digital currencies.
Open for public comment until 30 June, the Draft Capital Flow Management Regulations 2026 would replace SA’s long-standing pre-approval exchange control regime with a risk-based system focused on reporting, monitoring high-impact and high-risk cross-border transactions and combating illicit financial flows. Breaches could result in fines of up to R1 million, imprisonment of up to five years, or both.
Luno CEO James Lanigan warns the regulations risk locking SA out of a stablecoin-powered global trade system.
VALR CEO and co-founder Farzam Ehsani argues forex rules are based on an outdated understanding of how digital money moves – one that no longer reflects the reality of a modern digital economy.
Stablecoins – digital assets pegged to fiat cash – are already settling more value annually than Visa and Mastercard combined, with $33 trillion in payments and blockchain transfers in 2025, according to data shared by Bloomberg.
That is almost double the $17 trillion in spending facilitated by Visa in the same year, says Luno. The world’s financial services companies are no longer merely experimenting with blockchain technology but incorporating it into their backend systems, the crypto company adds.
Passport control
Lanigan says the rapid growth of stablecoins shows how digital assets have evolved into an integral part of the global financial system. The draft regulations will likely prohibit stablecoins being used by businesses to make cross-border payments and repatriate funds, given that they provide low-cost instant payment solutions and deep liquidity, particularly in dollar-strapped African markets.
The result is that businesses are reluctant to use stablecoins for cross-border transactions, reducing payment flows into SA and ultimately affecting tax revenue, says Luno.
“Local stablecoins are critical infrastructure to support domestic payments and treasury flows, while dollar stablecoins provide a fast bridge to global commerce and cross-border settlement. Together, they reduce friction, lower costs, and make money move more efficiently at home and abroad,” says Lanigan.
Ehsani argues that exchange controls are based on an outdated view that capital can simply “leave” SA, when digital rand remain within the country’s banking system and only ownership changes.
“In fact, over 97% of SA’s money supply is digital… It cannot be placed in a suitcase. It cannot be loaded onto a ship. It cannot exist inside a New York, London, Dubai, or Singapore bank account as rand unless there is a South African banking relationship behind it.”
Ehsani says the question should not be how we stop people from taking money out. “The question should be: how do we make SA a place where people want to bring money in?”
No permission slip
There are now two High Court judgements dealing with whether Bitcoin counts as money or a capital asset under the existing exchange control framework – leaving crypto holders in limbo.
In the Pretoria High Court, Judge Mandlenkosi Motha found that crypto-currency was not subject to SA’s existing foreign exchange regulations, noting that the law was apartheid-based and introduced to stem a run on the rand following the massacre of at least 69 black people in Sharpeville.
In a later judgement, Judge Stuart Wilson in the Johannesburg High Court expressly departed from that finding, ruling that Bitcoin constitutes capital under the country’s exchange control framework and can be subject to forfeiture for regulatory breaches.
Ehsani says exchange controls were “created for a different era” and are “now holding SA back”. Rather than relying on pre-approval and restrictions, he argues the country should adopt a modern framework based on reporting, transparency, tax compliance and anti-money-laundering enforcement.
“This is not an argument for no oversight. It is an argument for better oversight,” he says. “It is an argument that SA can protect financial integrity without restricting lawful capital movement. It can protect the tax base without making citizens ask permission to invest. It can protect the financial system without telling the world that capital is welcome only if it leaves by permission,” Ehsani adds.
Lanigan argues the regulations must specifically enable businesses to use stablecoins for cross-border payments and repatriate funds, warning that SA risks missing out on a rapidly growing global payments system.
“It is essential that SA moves, through thoughtful revision of the draft Capital Flow Management Regulations, to unlock the economic growth potential of stablecoins. Without the integration of stablecoins into the local financial mainstream, SA will limit its competitiveness in the modern economic system, falling further behind as the rest of the world upgrades its financial infrastructure,” Lanigan says.
Ehsani adds that “capital goes where it is welcomed, protected, respected and allowed to move”.
Nelson Mandela envisioned a country without exchange controls, says Ehsani, referring to the former president’s 1996 State of the Nation Address, in which he said monetary authorities were looking at phasing exchange controls out. Thirty years later, Ehsani says, it is time to bring that vision to reality.
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