South Africa Reconsiders Proposed Crypto Rules After Industry Backlash

South Africa is reconsidering its proposed cryptocurrency regulations after thousands of public comments. The government may change its approach to cross-border crypto transactions.

Finance Minister Enoch Godongwana announced the rethink on October 21, 2026. He said the proposed rules need a different approach. The National Treasury and South African Reserve Bank (SARB) plan to consult stakeholders. They will then publish a revised draft for further public comment.

Cryptocurrency exchanges, fintech companies, and other industry players have criticised the proposal. They warn that strict rules could limit legitimate digital asset activity. They also fear the restrictions could push transactions into less transparent channels.

Why South Africa Is Revisiting Its Crypto Rules

The proposed regulations aim to bring cryptocurrency transactions under South Africa’s existing capital flow management framework. Authorities say the rules would improve oversight of cross-border transfers. They also aim to prevent illicit financial flows.

However, industry participants have raised concerns about restrictions on offshore crypto platforms and self-custody wallets.

The draft Crypto Assets Manual appeared in August. It proposed restrictions on certain cross-border crypto transactions by businesses. Critics warned that the rules could also limit corporate use of stablecoins for international payments.

Stablecoins are digital assets designed to maintain a relatively stable value. Many track currencies such as the US dollar. Businesses increasingly use them for payments and settlement across borders.

Industry representatives argue that stricter rules for crypto payments could create an uneven playing field. Traditional financial channels may face different requirements for comparable transactions. Such differences could raise costs and discourage innovation.

Crypto Industry Backlash Drives Regulatory Rethink

Opposition to the proposals grew in the months after their publication.

Cryptocurrency exchanges, digital asset companies, and financial services providers raised concerns about the potential impact. They warned that the rules could hurt investment and innovation. They also questioned whether South Africa could remain competitive in the digital economy.

Luno warned that restrictive rules could raise costs for users. The company also cautioned that the measures could push transactions into less transparent channels.

VALR CEO Farzam Ehsani also criticised the proposed approach. He argued that authorities should apply any remaining exchange controls fairly across financial technologies.

Government Considers a Different Regulatory Approach

Godongwana acknowledged the industry feedback and outlined a possible change in direction. He said the government needed to move away from a system that requires prior approval for transactions.

Instead, he suggested that regulators should assess whether transactions serve legitimate purposes and meet tax requirements.

The minister also said the government should consider recommendations from the international Financial Stability Board. Those recommendations could help shape the revised regulatory framework.

What Happens Next for Crypto Regulation in South Africa?

The government plans to consult stakeholders before publishing a revised second draft. The new version will then undergo another round of public comment.

However, the announcement does not mean the government has scrapped the proposed restrictions. Authorities have not yet explained which provisions they will change. They have also not confirmed when they will release the revised draft.

The next version will matter to cryptocurrency exchanges and businesses that use digital assets for international payments. It will also affect companies developing stablecoin-based financial services.

For now, South Africa continues to review its proposed crypto rules. Industry participants await details of a framework that could offer greater flexibility while maintaining financial oversight.

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Editorial Takeaway

South Africa’s regulatory rethink highlights the challenge of balancing financial oversight with digital asset innovation.

Clear rules can help authorities combat illicit financial flows. However, excessive restrictions could limit legitimate cross-border payments and weaken the country’s competitiveness.

The revised draft will reveal whether regulators can address these risks without unnecessarily restricting cryptocurrency and stablecoin use.