South African crypto companies have put at least R2.2 billion in deals on hold as proposed exchange control rules threaten to restrict how digital assets can be used for cross border transactions, according to people familiar with the matter.
People familiar with the transactions said at least 3 deals have been paused directly because of the proposed regulatory changes. They include an investment from a private equity firm and transactions intended to support capital formation for small businesses and corporate treasury management.
Industry participants have warned that the proposed framework could push some legitimate digital asset activity offshore or into informal channels. Some executives are considering legal action if the rules are adopted without significant changes, the people said.
South Africa crypto rules have stalled R2.2 billion in deals
South Africa is the second largest crypto asset market in Africa, where stablecoins are increasingly used by companies moving funds between regional operations.
Businesses have used stablecoins to repatriate profits and receive dividends from subsidiaries in African markets where access to hard currencies can be limited. Tether’s $USDT has become the preferred stablecoin for such activity in South Africa.
Onchain $USDT transactions across 3 of the country’s largest licensed crypto exchanges approached R27 billion in the year through April, according to central bank data. The figure shows the scale of stablecoin activity already passing through regulated domestic platforms.
South Africa does not recognize crypto assets as legal tender. The South African Reserve Bank has previously identified digital assets as an emerging financial stability risk and has been monitoring activity as stablecoin use expands internationally.
Regulators are now seeking to bring crypto assets within a capital flow system built around the Currency and Exchanges Act, legislation that dates back roughly 9 decades.
The National Treasury first published its proposed framework in April as part of an overhaul of the country’s capital flow management regime. As crypto.news previously reported, the draft would formally classify crypto assets as capital under South Africa’s foreign exchange rules and extend declaration, approval and enforcement powers to digital asset transactions.
Officials said the framework is intended to improve oversight of cross border transactions, reduce opportunities for regulatory arbitrage and address illicit financial flows.
Cross border crypto transfers face tighter controls
More detailed rules released in August set out how digital asset transfers would operate under the proposed system.
Under the cross border crypto rules, transfers would generally need to pass through authorized providers and be reported to the South African Reserve Bank. Transactions involving offshore crypto providers or private wallets would fall within the regulated cross border category.
Individuals moving crypto outside South Africa would remain subject to the country’s existing foreign currency allowances. The annual single discretionary allowance permits transfers of up to R1 million without tax clearance, while the foreign capital allowance permits up to R10 million subject to tax compliance requirements.
Authorized crypto asset service providers would be required to collect information on cross border transfers, including the identities of the sender and recipient, the assets involved, transaction values and destination wallet details.
The National Treasury and South African Reserve Bank said in a joint statement that the detailed manual released last month does not yet incorporate feedback submitted during the earlier consultation.
Officials attributed that gap to the timing of the release and the volume of comments received after the government invited interested parties to respond to the April proposals.
Some digital asset executives have objected to the process, arguing that the current draft does not adequately account for industry submissions. People familiar with their concerns said executives view parts of the framework as unfavorable to technology being used to reduce transaction costs.
If the regulations proceed in their current form, companies believe they could affect billions of rand in tax revenue generated by the sector and potentially lead to legal challenges, according to the people.
Stablecoins remain part of South Africa’s regulatory focus
Stablecoin activity has become a particular area of attention as regulators assess how dollar linked tokens interact with domestic currency and capital controls.
An International Monetary Fund assessment published in August found that dollar stablecoins had gained only limited traction in South Africa, while rand denominated alternatives had attracted even less demand. The IMF cautioned that it was still too early to determine whether the pattern would persist. Dollar stablecoin adoption remains dominant globally, with nearly 99% of stablecoins denominated in U.S. dollars.
South Africa’s treatment of digital assets extends beyond capital controls. The South African Revenue Service published draft guidance in July explaining how existing tax rules apply to crypto transactions rather than proposing a separate tax regime.
Under the draft crypto tax guidance, SARS maintained that crypto assets are not currency for tax purposes. Buying, selling, swapping, spending, mining, staking or receiving digital assets can create tax consequences under existing income and capital gains rules, depending on the nature of the activity.
South Africa has separately begun implementing the OECD’s Crypto Asset Reporting Framework. Its first CARF reporting period runs from March 1, 2026, through Feb. 28, 2027, with crypto service providers required to collect information that will support automatic exchanges of tax data between participating jurisdictions.
The government has yet to finalize the proposed capital flow rules after receiving industry comments, leaving the detailed framework subject to further consideration by the National Treasury and South African Reserve Bank.