South Africa’s central bank is saying no to crypto after calling the digital asset a new risk to the country's financial system. In a report released on Tuesday, the South African central bank noted the growing popularity of crypto in the country, quoting a total of 7.8 million people who are active users.
However, the entity also noted how the borderless and anonymous nature of crypto could be easily misused to transfer money in and out of the country undetected.
“Due to their exclusively digital – and therefore borderless – nature, crypto assets can be used to circumvent the provisions of the Exchange Control Regulations.”
While Bitcoin (BTC), Ether (ETH), XRP (XRP), and Solana (SOL) remain widely used, SARB highlighted a notable “structural shift” in market behavior since 2022. USD-pegged stablecoins have increasingly become the preferred trading pairs on South African crypto platforms.
This shift, the central bank explained, is driven by the lower volatility of stablecoins relative to unbacked crypto assets:
“Whereas Bitcoin and other popular crypto assets were the main conduit for trading crypto assets until 2022, USD-pegged stablecoins have become the preferred trading pair on South African crypto asset trading platforms […] This is due to the notably lower price volatility of stablecoins compared to unbacked crypto assets.”
The trend mirrors global developments, where stablecoins have become key on-ramps for users seeking dollar exposure without relying on traditional banking rails.
However, the regulator has also noted how the rate of development in the crypto landscape has far outpaced the country's regulation development, and how South Africa still lacks a comprehensive regulatory framework for stablecoins, and only "partial regulation" is in place.
SARB warned that without sufficient regulatory visibility, financial risks tied to crypto activity could “build up undetected,” potentially threatening market stability and consumer protection.
SARB’s cautious tone echoes concerns it raised as far back as 2017, when then-deputy governor Francois Groepe warned about the risks of issuing digital currencies. However, not all branches of the South African government share the same level of skepticism.
In 2022, the Financial Sector Conduct Authority (FSCA) formally classified crypto assets as a financial product, giving the agency authority to license and supervise crypto service providers. This move signaled a more progressive approach, opening the door for regulated crypto businesses to operate legally in the country.
As South Africa’s crypto user base continues to expand, SARB’s latest warning underscores an ongoing challenge: balancing financial innovation, particularly in a country with strong demand for alternative payment and investment tools, with the need for clear regulatory guardrails.
Until a full framework is implemented, regulators say risks tied to the fast-moving crypto sector will continue to evolve — and may remain difficult to track.
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