Barring South African companies from moving crypto assets across the country’s borders will likely drive those transactions underground or offshore and reduce the very oversight national treasury and the South African Reserve Bank are trying to achieve, according to VALR CEO Farzam Ehsani.
Ehsani was responding to the draft Crypto Asset Manual for cross-border activities that propose barring resident entities from transacting across the border in either direction, while giving resident individuals a route offshore under their existing allowances.
Written comments are open until close of business on 30 September, the authorities have said the final manual will follow only once submissions are considered, and it cannot be implemented until the draft Capital Flow Management Regulations — themselves still under review — are promulgated. Treasury and the Reserve Bank have also acknowledged that both documents remain subject to refinement.
Ehsani’s central objection is that the prohibition works against the authorities’ own stated purpose. The proposed measures are intended to close off regulatory arbitrage and to strengthen the ability of the Reserve Bank’s Financial Surveillance Department to detect, deter and disrupt illicit financial flows.
“By prohibiting legitimate corporate activity through regulated providers, the proposed framework is likely to drive transactions underground or offshore,” Ehsani said. The effect would be to “reduce the very visibility and surveillance” that treasury and the Reserve Bank seek to achieve, he said, “while undermining employment, tax revenue, investment, innovation and business formation”.
He said the manual in its current form “is prejudicial to crypto assets and licensed CASPs (crypto asset service providers) and risks severely damaging South Africa’s crypto industry”.
‘Requires substantial reconsideration’
Monday’s published draft could mean that stablecoin settlement by South African-registered businesses — arguably the most compelling institutional use case for crypto in an emerging market — be disallowed. A local software company invoicing a US client in a dollar stablecoin would have no lawful way to receive it through a licensed local provider, while its founder, transacting personally within his or her allowance, would.
Ehsani argued that the technology is being penalised for what it is rather than for any risk it carries.
“This is particularly concerning when stablecoins and other crypto assets can facilitate cross-border payments more quickly, cheaply and transparently than traditional channels, while remaining fully subject to appropriate reporting and oversight,” he said.
Read: South Africa’s crypto progress on the line
“On what principled basis should corporations and institutions be prohibited from using this technology to move value legitimately between South Africa and the rest of the world?”
Regulation should govern the movement of value and manage the risks attached to it, he said, and “should not dictate which technologies individuals and businesses can use”. It “must, at the very least, provide a level playing field for new technologies rather than entrenching legacy systems and practices”.
Ehsani also took aim at the second proposal flagged in Monday’s report: that an individual may send crypto from a licensed local provider to their own non-custodial wallet, but may not move it back in, making local exchanges an exit but not an entrance for anyone holding their own keys.
The treatment “requires substantial reconsideration”, he said. “This is neither practical nor sensible. It would effectively encourage South Africans using self-custodial wallets to transact through offshore exchanges rather than regulated local CASPs — a perverse outcome for a regulatory framework that seeks to do exactly the opposite.”
He acknowledged one shift towards the industry in the draft manual, which now treats withdrawal from a CASP rather than the purchase of a crypto asset as the reportable transaction.
Read: SA companies could face cross-border crypto ban
VALR and Luno, South Africa’s two largest licensed crypto exchanges, warned in April that the draft Capital Flow Management Regulations, gazetted on 17 April to replace the Exchange Control Regulations of 1961, could reverse years of progress in building a regulated digital asset industry. Ehsani described that document at the time as “an alarming document”.
Ehsani’s broader position is that South Africa would be better served by abolishing exchange controls altogether while preserving reporting, transparency and regulatory surveillance, rather than “attempting to retrofit a half-century-old regulatory regime onto modern technology and the digital economy”. If the country retains capital controls, he said, it should apply them on a “principled, fair and technology-neutral basis”.
He set that case out at length in an opinion piece in TechCentral in June, arguing that exchange control rests on a model of money that predates digital banking, that the Reserve Bank’s reserves are not depleted when a private individual buys foreign currency, and that what the regime now restricts is not capital flight but freedom. — (c) 2026 NewsCentral Media
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