CATASTROPHE Coalition Warns Proposed Regulations Will Cripple South African Progress

CATASTROPHE (Crypto Asset Taskforce for Advancing Sound, Technology-Neutral Regulation for Opportunity, Prosperity and a Healthy Economy) has launched a national campaign to highlight the unintended adverse consequences of proposed cross-border regulations in South Africa.

The coalition warns that restrictive draft rules would harm domestic enterprises and jobs, slow economic participation, and isolate South Africa from the global digital economy.

The draft framework published by South Africa's National Treasury and the South African Reserve Bank introduces two major restrictions:

1. Blocking Cross-Border Crypto Payments by Businesses: South African companies would be prohibited from using regulated crypto rails for otherwise legitimate international transactions, putting local businesses at a severe competitive disadvantage globally.

2. Restricting Individual Self-Custody: While individuals can withdraw assets from a local CASP to a personal self-hosted wallet, transferring those assets back into a regulated South African platform would be designated as 'non-permissible', creating an arbitrary one-way door out of the domestic regulated ecosystem.

CATASTROPHE proposes that South Africa should regulate equivalent cross-border economic activity consistently. The coalition emphasizes that failing to apply the same principle to cross-border payments would represent a departure from sound, technology-neutral regulation and be inconsistent with the principle articulated by SARB Governor Lesetja Kganyago: 'The principle is straightforward: similar payment activities should be subject to similar regulatory expectations, whether they are performed by a bank or a fintech.'

The campaign calls for a level playing field for cross-border payments without discriminating against any particular technology. Regulation should be fair and designed in the interests of South African consumers and businesses, promoting competition, innovation, and choice.