South Africa Flags Crypto and Stablecoin Gaps as Emerging Threat to Financial Stability

The South African Reserve Bank (SARB) has once again raised alarms over digital assets, emphasising that the lack of a complete regulatory framework for crypto and stablecoins is creating a blind spot in the financial system. 

The borderless, entirely digital nature of cryptocurrencies allows them to circumvent South Africa’s exchange control regulations, which were not designed to cover these assets. Herco Steyn of the SARB stressed that without a full regulatory framework, authorities cannot provide adequate oversight, though reform is expected in 2025.

As crypto asset adoption in South Africa grows, so does the need for the domestic regulatory framework to continue to evolve in response to crypto asset market developments and risks.

The South African Reserve Bank

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New Rules Underway

The SARB and National Treasury are developing new regulations to tighten control over cross-border crypto flows and ensure that digital assets fall under exchange control supervision. 

Since 2022, there has been a structural shift in South African crypto trading. While Bitcoin and other cryptocurrencies previously dominated, US dollar-pegged stablecoins have become the leading trading pair due to their lower price volatility. Bitcoin has dropped from US$126,000 (AU$193,000) in October to roughly US$87,000 (AU$134,000), and Ether has declined by about 40% since its August high.

Trading volumes for stablecoins have surged from under 4 billion rand (AU$359 million) in 2022 to nearly 80 billion rand (AU$7.18 billion) by October 2025. The three main platforms, Luno, VALR, and Ovex, now serve 7.8 million registered users, holding total assets of 25.3 billion rand (AU$2.28 billion) at the end of 2024. As crypto adoption grows, the central bank emphasised the need for regulations to evolve alongside the market to address emerging risks.

Cross-Border Concerns

The European Central Bank has also cautioned that stablecoins could threaten banking systems by moving deposits away from traditional lenders and into US Treasury-backed instruments, leaving banks more vulnerable to liquidity shocks. 

South Africa’s rapid uptake of stablecoins, coupled with regulatory gaps, illustrates the need for robust oversight to safeguard the country’s financial system.

Related: SEC Chair Paul Atkins Outlines “Project Crypto,” Hints at Token Taxonomy and Evolving Securities Rules