Stablecoins and central bank digital currencies (CBDCs) are gaining traction worldwide, and the South African Reserve Bank has told TechCentral it is watching the developments closely as it considers if – and how – the technologies could be implemented in South Africa.

US President Donald Trump last month signed the Guiding and Establishing National Innovation for US Stablecoins (Genius) Act into law. Among other things, the signature piece of legislation establishes the statutory processes any American entity wishing to create and issue a stablecoin must follow.

European regulators have now signalled their intention to establish legislation of their own to govern stablecoins, while other countries, including China – the world’s second largest economy – are already experimenting with CBDCs.

“The Sarb is closely monitoring market developments related to stablecoins, including the finalisation of legal frameworks in other jurisdictions on the approach to them,” the Reserve Bank said in e-mailed response to questions from TechCentral.

“While stablecoins are a type of crypto asset, they present new value propositions for users, create unique risks and have the potential to amplify existing risks, meriting closer scrutiny,” it said. “Work is currently ongoing to further assess the policy and regulatory implications of stablecoins to inform the treatment of them in South Africa.”

Although both are digital currencies, stablecoins and CBDCs differ in the way they are deployed and function. CBDCs are a digital form of fiat currency that could run on a public blockchain or private database. A rand-based CBDC has the potential to promote financial inclusion by making payments faster and cheaper.

Rand-based CBDC

They also have the potential to change how money is distributed in the economy. The physical cash model moves money from the central bank to the commercial banks and then to consumers, with interest charged between each party in the chain. A CBDC would allow for the Reserve Bank to distribute money directly to consumers.

The Bank said it is still investigating which model would work best, and why, for the South African economy. However, the introduction of a rand-based CDBC could have implications beyond the country’s borders.

“A rand-based CBDC could offer several potential benefits to the Southern African Development Community (Sadc) remittances market, particularly in enhancing efficiency, reducing costs and improving transparency,” it said.

Read: EFTs may go in Reserve Bank payments overhaul

“While the Sarb has not yet formed a formal position on cross-border use cases for retail CBDC, preliminary analysis suggests that, if designed with interoperability and regional collaboration in mind, a CBDC could facilitate faster and more secure remittance flows across Sadc countries. Further work would be required to assess the technical, regulatory and policy implications of such applications.”

Work is underway to improve the efficiency of payments at a local and regional level, with initiatives such as PayShap and Transactions Cleared on an Immediate Basis (TCIB) already addressing some of the benefits CBDCs offer. The Reserve Bank said any plans for CBDC implementations must consider these projects, too.

Stablecoins, in contrast, are typically issued by private entities, not central banks. Whereas a CBDC represents the exact value of fiat currency like the rand, a stablecoin’s value is tied – or tethered – to another asset or mix of assets. Stablecoins are usually backed by the reserves of the tethered assets held by the private entity issuing the coins.

The Reserve Bank’s work on stablecoins is ongoing. The Intergovernmental Fintech Working Group recently published a South African Stablecoin Landscape Diagnostic, which sets out various considerations relating to rand-pegged stablecoins, including stablecoin issuance, reserve assets requirements, stabilisation mechanisms and redemption rights, among others.

The mixture of optimism and caution shown by the Reserve Bank regarding stablecoins is reflected in the banking sector, too. Standard Bank, Africa’s largest bank by total assets, said it has actively participated in various stablecoin-related initiatives to develop its technical readiness to offer stablecoin transactions.

“Through stablecoins, we see opportunities to deliver immediate settlement across our presence markets, to enable new automated flows that make trade more efficient, and potential for participation in global money market funds,” a spokesman for the bank told TechCentral.

“Businesses and consumers in our markets stand to benefit from faster settlement, reduced transaction costs, programmable smart contract efficiency and improved capital and reserve management.”

Digital challenger Discovery Bank, said it is closely monitoring local and international developments in digital assets, including stablecoins, and their potential to enhance financial inclusion, payment efficiency and innovation.

Read: What’s holding PayShap back in South Africa

“While we do not currently have plans to issue a proprietary stablecoin, we remain open to exploring future opportunities that align with our shared-value model and regulatory frameworks,” said Discovery Bank. – © 2025 NewsCentral Media

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