Dieketseng Maleke|Published
South Africa’s debate over crypto asset regulation is entering a more practical phase, with National Treasury and the South African Reserve Bank (SARB) signalling a shift towards clearer rules for cross-border digital asset activity rather than restrictions on ownership itself.
In an updated statement on the Draft Capital Flow Management Regulations, Treasury and the central bank extended the public comment deadline to June 30, 2026 and clarified that the proposed rules are not intended to criminalise the possession of crypto assets or apply retrospectively.
The announcement is being viewed by parts of the industry as an attempt to provide greater certainty in a sector that has long operated in a regulatory grey area. Treasury and SARB also indicated that a draft manual outlining a proposed cross-border crypto asset framework will be released for public comment. The manual is expected to define what constitutes a cross-border crypto transaction and set out the obligations of authorised crypto asset service providers.
“The updated statement is constructive because it moves the discussion away from fear about crypto ownership and towards the practical work of defining lawful cross-border activity, reporting obligations, and the role of licensed service providers,” says Mark Diuga, CEO of Bitexen South Africa.
The move comes as South Africa continues to tighten oversight of the digital asset sector. In recent years, the country has taken steps to bring crypto businesses within the formal financial system, including requiring crypto asset service providers to register with the Financial Sector Conduct Authority (FSCA).
According to a 2024 report by Chainalysis, South Africa remains one of the largest crypto markets in Africa, with growing institutional and retail participation in digital assets across the continent. The report noted that sub-Saharan Africa accounted for billions of dollars in crypto transaction volume over the past year, driven largely by demand for alternative payment systems, cross-border transfers, and inflation hedging.
Industry analysts say regulatory clarity is increasingly important as governments globally seek to balance innovation with concerns around money laundering, tax evasion, and illicit financial flows.
For Bitexen South Africa, clearer rules could help strengthen consumer trust and create a more predictable environment for companies operating in the market.
The company argues that regulation is most effective when it reflects the technical realities of digital assets, particularly the distinction between ownership and cross-border financial activity.
One of the more contentious issues in the crypto sector is self-custody, where individuals hold and control their own digital assets rather than using a centralised institution or exchange.
Traditional financial systems generally distinguish between assets held locally through regulated institutions and those held offshore through foreign intermediaries. Blockchain technology complicates that distinction because digital assets can be stored directly by individuals without a bank or custodian.
“Self-custody is a foundational feature of digital assets. The challenge is to build practical, risk-based regulation that distinguishes between lawful self-custody, regulated local custody, offshore financial activity, and genuinely suspicious or illicit flows,” says Diuga.
The forthcoming draft manual is expected to provide more guidance on how regulators intend to treat such arrangements and how compliance obligations will apply in practice.
Unlike traditional financial systems, blockchain networks also offer traceability and programmable features that can support monitoring and compliance. Industry players say measures such as transaction monitoring, risk-based reporting, and implementation of the so-called “Travel Rule” could allow regulators to track suspicious activity without treating all crypto activity as inherently unlawful.
The debate is unfolding at a time when governments around the world are moving to formalise oversight of digital assets. The International Monetary Fund and the Financial Stability Board have both urged countries to introduce clearer crypto regulatory frameworks to address financial stability and anti-money laundering risks while supporting innovation.
For South Africa, the stakes are significant. Supporters of the sector argue that digital assets could contribute to broader financial innovation, including tokenised assets, blockchain-based infrastructure, and more efficient cross-border payments.
“South Africa has an opportunity to lead in blockchain-native financial infrastructure. The goal should be to protect the integrity of the financial system while still allowing responsible innovation to develop,” says Diuga.
The extended consultation process now gives regulators, financial institutions, compliance experts and crypto businesses more time to influence the final framework. The next phase of the process is likely to determine whether South Africa can strike a balance between safeguarding the financial system and creating room for innovation in the fast-evolving digital asset economy.
PERSONAL FINANCE
