Coalition leads public revolt against treasury’s crypto draft

South Africa’s biggest regulated crypto platforms have taken their fight public, forming a coalition and launching a petition against draft rules that would bar local companies from making cross-border payments in crypto assets.

The coalition has given itself the pointed acronym Catastrophe — Crypto Asset Taskforce for Advancing Sound, Technology-Neutral Regulation for Opportunity, Prosperity and a Healthy Economy — and brings together VALR, Luno, AltCoinTrader and EasyEquities alongside professors, lawyers, economists and entrepreneurs. It launches on Wednesday, 9 September, three weeks before the comment period closes on 30 September.

At issue is the draft crypto asset manual for cross-border activities, published in early August by national treasury and the Reserve Bank’s financial surveillance department, alongside the draft capital flow management regulations that will replace the Exchange Control Regulations of 1961.

The coalition has two objections. The first is that South African companies would be barred from using regulated crypto rails for cross-border transactions that are perfectly lawful through a bank. Local firms may hold and trade crypto domestically but may not enter into transactions deemed an import or export of capital — so a software company invoicing an American client in dollar-denominated stablecoins would have no lawful way to receive the money through a licensed local provider.

The second is what the campaign calls the self-custody one-way street. An individual may move crypto assets from an authorised South African provider into a personal wallet, but moving them back is designated non-permissible. “Good regulation should encourage activity to return to the regulated system — not create a one-way door out of it,” the campaign says on its website.

Kganyago’s own words

Catastrophe’s central argument is one it has borrowed from the governor of the Reserve Bank. Speaking at the MTN Group Fintech summit last week, Lesetja Kganyago set out the thinking behind the central bank’s shift from entity-based to activity-based regulation of the payment system. “The principle is straightforward: similar payment activities should be subject to similar regulatory expectations, whether they are performed by a bank or a fintech,” he said.

Not applying that principle to cross-border payments, the coalition argues, would be a departure from technology-neutral regulation. Banks, authorised dealers and licensed crypto providers may need different operational rules, it says, but equivalent activities should attract equivalent permissions.

Hundreds of licensed crypto asset service providers operate in South Africa, according to the campaign, employing thousands of people and paying billions of rand in corporate income tax, PAYE and VAT. Catastrophe says those jobs would be threatened if the rules pass as drafted, and that billions in foreign investment is already on hold, though it names no investors.

Regulatory lobbying is usually done out of sight, in written submissions and closed meetings. Asked why the industry had gone public instead, VALR CEO Farzam Ehsani — speaking as a signatory rather than for the campaign — said the stakes justified it.

Reserve Bank governor Lesetja Kganyago

The industry had engaged with policymakers for years and would continue to, he told TechCentral, but the drafts carried potentially far-reaching consequences for South African businesses, consumers and the wider digital asset industry. “It’s important that those who may be affected understand what is being proposed and have an opportunity to make their voices heard,” he said. The campaign, he added, was meant to broaden participation in the consultation.

Ehsani made a similar case in a submission last month, arguing that prohibiting legitimate corporate activity through regulated providers “is likely to drive transactions underground or offshore” and cost the authorities the visibility they are seeking. He has argued previously for scrapping exchange controls entirely while keeping reporting obligations.

The commercial stakes were illustrated on Tuesday, 8 September, when Luno announced a partnership with US-regulated digital clearing house Meridian letting institutional clients mint stablecoins the moment a dollar payment lands. Dollars arriving by ACH, FedWire or Swift are minted automatically into USDC or USDT and settle into the client’s Luno wallet, replacing over-the-counter processes that can take hours or days. It launches in South Africa first, on the class F digital asset business licence Luno recently obtained in Bermuda.

“The appeal of stablecoins to institutional treasurers is less about crypto and more about control,” said Paul Harker, Luno’s global head of legal and corporate strategy. “A business can only plan its cash flow if it can get dollars when it needs them, not only when its bank, its counterparty and the correspondent network all happen to be open at the same time.”

Luno flagged in the same announcement that the draft rules could put the product out of reach locally, because the prior approval contemplated would negate the point of instant settlement. The demand is not theoretical: the IMF reported in June that dollar-pegged tokens have become a significant cross-border channel in Nigeria, where scarce dollar liquidity leaves businesses few alternatives.

TechCentral has reached out to Luno, EasyEquities and the Reserve Bank for comment on the formation of the new crypto coalition.

‘Avenue to circumvent exchange controls’

The complaint is partly one of timing: Mastercard closed its acquisition of BVNK for up to US$1.8-billion in August, the biggest of a run of stablecoin deals by the global payment networks.

Catastrophe’s minimum ask is a level playing field: let local businesses transact across borders in crypto, let assets move both ways between regulated platforms and self-custody, and regulate the risk rather than the technology. Its ideal is for South Africa to leave exchange controls behind altogether. It says it will dissolve once it has won a better outcome.

Treasury and the Reserve Bank say the treatment of crypto is meant to minimise regulatory arbitrage between entities doing cross-border business. When treasury first signalled the move in February, it put the concern plainly: “As crypto payments are borderless, they present an avenue to circumvent exchange controls.”

Both sides, in other words, want the same thing: crypto activity inside the regulated system, where it can be seen. What they disagree about is which set of rules will keep it there. — © 2026 NewsCentral Media