SA Cracks Down on Cross-Border Crypto Transactions

South Africa is moving to tighten regulations on cross-border cryptocurrency transactions as part of efforts to curb illicit financial flows. The National Treasury and the South African Reserve Bank (SARB) have published a draft framework that proposes stricter controls on offshore crypto payments.

The proposed rules require all offshore crypto transactions to be declared through authorized providers and reported to SARB's surveillance arm FinSurv for approval. This includes cross-border transactions involving self-custody or non-custodial wallets, which are currently held locally but considered offshore accounts under the draft framework.

LUNO's General Manager for Africa and Europe, Marius Reitz, welcomed the clarification on what constitutes an onshore asset in South Africa, saying it would keep capital within the nation's borders and provide 'much-needed regulatory clarity' for investors and providers. However, he flagged concerns over the draft's exclusion of local businesses from making cross-border payments using stablecoins.

Carel van Wyk, CEO and Co-founder of MoneyBadger, a leading Crypto Asset Service Provider (CASP) in Africa, also expressed reservations about the draft framework. He argued that it would impose restrictions on South African companies using crypto for legitimate cross-border payments, while conventional banking channels remain as an alternative.

The draft framework is open for public comment until September 30 and has sparked concerns among industry players that the proposed rules could weaken local CASPs, discourage innovation, and push activity offshore or outside regulated channels. The targeted flow suggestions also consider self-custody wallets as offshore accounts, which van Wyk notes would reject CASPs receiving funds from such accounts.