National Treasury and the South African Reserve Bank have published a draft Crypto Asset Manual for cross-border activities, with public submissions due by 30 September. The manual operates alongside draft Capital Flow Management Regulations released in April, which would formally bring crypto assets under South Africa’s exchange control regime. Together, the documents define when a crypto transaction qualifies as a capital import or export, what reporting obligations apply, and which service providers may facilitate cross-border movement.
The framework has drawn sharp criticism from operators who warn that its complexity and cost structure will disadvantage smaller firms and push established players to relocate. Shiven Moodley, macro strategist and CEO of fintech company Novaque, laid out the concern directly. Requirements around minimum capital, local infrastructure, reporting, reconciliation, outsourcing and prior approval for offshore liquidity arrangements create high fixed costs before a business achieves scale. This structure could stifle investment in South African digital asset companies and drive them offshore, Moodley said. Businesses involved in market-making, treasury, technology and other digital asset activities may take their operations abroad to more favourable jurisdictions, leaving only the regulated, client-facing function in South Africa. The result: less domestic innovation, fewer local jobs and reduced regulatory visibility over the broader digital asset value chain.
The manual does contain one genuine improvement over earlier proposals. Transactions are now reportable when crypto is withdrawn from a local exchange to an offshore platform or private wallet, rather than at the point of purchase. This shift addresses earlier industry concerns that treating the purchase itself as a capital externalisation was both illogical and impractical. Farzam Ehsani, CEO of crypto exchange VALR, acknowledged this adjustment as encouraging but emphasised that serious concerns remain about the overall framework.
The most contentious element is the prohibition on South African companies and institutions sending or receiving crypto across borders. A company could purchase crypto locally, hold it with a local service provider, transfer it between local providers and sell it for rand. What it cannot do is move that crypto to an offshore provider or private wallet, or receive crypto from an offshore platform. This restriction eliminates some of the most commercially useful applications of blockchain technology. Exporters could not receive payment in USD-backed stablecoins. Importers could not settle international invoices using crypto. Technology businesses could not accept crypto payments from foreign customers.
Ehsani questioned the principled basis for prohibiting corporations from using regulated technology to move value legitimately between South Africa and the rest of the world. Stablecoins and other crypto assets can facilitate cross-border payments more quickly and cheaply than many traditional channels while remaining subject to reporting requirements and regulatory oversight, he noted. By prohibiting legitimate corporate activity through regulated providers, the proposed framework is likely to drive transactions underground or offshore, reducing the very visibility that National Treasury and the Sarb seek to achieve while undermining employment, tax revenue, investment, innovation and business formation.
The framework also creates a striking one-way door for self-custody wallets. Individuals could transfer crypto from an authorised South African provider to a private wallet, provided the transaction falls within the relevant offshore allowance and is reported. Transferring crypto in the opposite direction, from a private wallet into an authorised local provider, would be prohibited. Ehsani warned this would encourage self-custody users to transact through offshore exchanges rather than regulated local providers, achieving the opposite of what the framework intends. The requirement to report any transfer from a local exchange to a private self-custody wallet has drawn particular opposition from industry participants who view self-custody as a fundamental right and a more secure protection against hacks and state confiscation.
Carel de Jager, CEO of blockchain intelligence and engineering company Silver Sixpence, expressed relief that externalisation does not occur on a buy transaction but rather on a withdrawal, though he acknowledged this is still not ideal. Carel van Wyk, CEO of MoneyBadger, which enables merchants to accept crypto payments, stated plainly that authorities are now going after self-custody, which he views as a fundamental right. The reporting requirement may face legal challenge as a violation of both privacy and property rights.
Smaller crypto asset service providers face additional operational hurdles. A Financial Sector Conduct Authority licence would not automatically permit cross-border business. Casps would need separate authorisation from the Sarb’s Financial Surveillance Department, Sarb-compatible reporting systems, and unimpaired capital of at least R5 million or 15 percent of average positive gross income. These requirements favour large, well-capitalised institutions and raise the barrier to entry for newer operators.
Meanwhile, the manual treats bitcoin, stablecoins and utility tokens identically despite their different uses and risk profiles. Although the framework provides a lawful route for individuals to move crypto offshore, its restrictions could push more activity toward offshore platforms and peer-to-peer markets. The practical outcome could be tighter regulation on paper in South Africa but less visibility over actual transactions, directly undermining the surveillance objective that motivated the rules. Whether National Treasury and the Sarb revise the framework before it is finalised, or whether operators begin making relocation decisions before that process concludes, remains the open question the industry is watching.