Crypto Rules Could Drive Business Offshore, Stifle Investment

The National Treasury and South African Reserve Bank have proposed new rules for cross-border crypto transactions that could drive legitimate business offshore, according to industry participants.

The draft Crypto Asset Manual for cross-border activities would require reporting on any transfer of crypto from a local exchange to a private self-custody wallet, which is seen as an overburdening of already strained exchanges.

Industry leaders have expressed concerns that the rules could favour large institutions while limiting smaller firms' ability to enter and compete in the digital asset market.

Shiven Moodley, macro strategist and CEO of fintech Novaque, warns that the cost and complexity of the proposals could lead to stifle investment in South African digital asset companies and drive them offshore.

Moodley adds that businesses involved in market-making, treasury, technology, and other digital asset activities may take their operations abroad to more favourable jurisdictions, leaving only regulated, client-facing functions in South Africa.