R2.2 Billion in Crypto Deals Frozen as South Africa Tries to Regulate

The South African government's proposed regulations to bring cryptocurrencies under exchange control have halted R2.2 billion in digital asset deals, highlighting the significant disruption for the country's burgeoning crypto sector.

These new rules aim to update the nine-decade-old Currency and Exchanges Act to manage capital flows and monitor cross-border transactions, but industry stakeholders are expressing dissatisfaction, arguing that the draft regulations could push legitimate transactions offshore and impact tax revenue.

The South African Reserve Bank and National Treasury are still engaging with stakeholders, with public comments accepted until September 30. The country's crypto market has seen R27 billion in local stablecoin transactions over the past year, with Tether's USDT being the preferred stablecoin.

Industry executives view the proposed rules as unfairly prejudiced against new technologies that are lowering transaction fees and enhancing financial efficiency. They warn that if enacted in their current form, these laws could significantly diminish the billions of rand in taxes collected by the government from the burgeoning crypto sector.