South Africa to Implement Cross-Border Cryptocurrency Regulation by 2025
South Africa to Regulate Cross-Border Crypto Transfers
In a move aimed at addressing regulatory gaps and preventing illicit financial flows, the South African Reserve Bank (SARB) will publish a new framework this year to regulate cross-border crypto asset transfers.
The announcement comes after a Pretoria High Court ruling in May that cryptocurrencies fall outside South Africa’s exchange control rules, creating a regulatory void. This targeted regulatory approach seeks to align existing exchange control laws with the digital asset reality, addressing concerns identified by the Intergovernmental Fintech Working Group.
The forthcoming framework will establish clear regulatory parameters, administrative responsibilities, and reporting rules for crypto asset service providers (CASPs) involved in moving crypto assets across borders. These CASPs include major exchanges like Binance, Luno, and VALR.
The goal of the framework is to prevent regulatory loopholes and stop illicit financial flows, as stated by Finance Minister Enoch Godongwana. It will primarily focus on cross-border transactions, not domestic transactions.
Crypto asset service providers have been designated as accountable institutions under the Financial Intelligence Centre Act since December 2022, making them subject to anti-money laundering (AML) and counter-terrorism financing rules. The forthcoming framework will build upon these AML standards by requiring detailed reporting about cross-border transactions, thus strengthening oversight and closing regulatory gaps.
The Financial Regulators Steering Committee—comprising SARB, the Financial Sector Conduct Authority (FSCA), the Prudential Authority, and National Treasury—will coordinate the ongoing development and implementation of the framework.
It is important to note that the South African government will not draft a comprehensive cryptocurrency exchange control exemption framework, as announced by the finance minister. Instead, the new framework is a response to the concerns identified by the Intergovernmental Fintech Working Group.
The SARB has appealed the May ruling that South Africa’s exchange control rules do not apply to cryptocurrencies and need urgent reform. However, the new framework marks a significant step towards regulating the cryptocurrency sector in South Africa.
In summary, South Africa’s new regulatory framework intends to:
- Target crypto asset service providers involved in cross-border transfers
- Establish clear regulatory parameters, administrative responsibilities, and reporting rules
- Prevent illicit financial flows, regulatory arbitrage, and ensure compliance with AML and exchange control objectives
- Update and strengthen the country’s exchange control legislation to close current legal loopholes regarding cryptocurrencies.
- The South African Reserve Bank (SARB) is introducing a new framework this year to regulate cross-border crypto asset transfers, aligning with the digital asset reality and addressing concerns identified by the Intergovernmental Fintech Working Group.
- Crypto asset service providers (CASPs), including Binance, Luno, and VALR, will be subject to the forthcoming framework, expected to establish clear regulatory parameters, administrative responsibilities, and reporting rules for cross-border transactions.
- The goal of the framework is to prevent regulatory loopholes, stop illicit financial flows, and ensure compliance with anti-money laundering (AML) and counter-terrorism financing rules, as stated by Finance Minister Enoch Godongwana.
- In South Africa, crypto asset service providers have been designated as accountable institutions under the Financial Intelligence Centre Act since December 2022, and the forthcoming framework will build upon these AML standards by requiring detailed reporting about cross-border transactions.
