South Africa's Crypto Rules Leave Billions in Deals Frozen

South Africa's proposed crypto regulations have put billions of rand in deals on hold. Digital-asset companies operating in the country have halted transactions valued at R2.2 billion due to the suggested changes, according to people familiar with the matter.

The proposed rules would include cryptocurrencies under the country's exchange-control regime and limit their use in cross-border transactions. This could push legitimate digital-asset transactions offshore or underground, the people said.

South Africa is the continent's second-largest cryptoasset market, with firms using stablecoins to repatriate profits and receive dividends from subsidiaries across the region. Tether's USDT is the preferred stablecoin locally, with on-chain transactions across three of the country's biggest licensed cryptocurrency exchanges nearing R27 billion in the year through April.

The government first published the proposals in April and called for comments from interested parties. However, it hasn't yet taken input into account due to the release timing and volume of comments received, according to a joint statement from the National Treasury and South African Reserve Bank.