Stakeholders in South Africa’s crypto industry are urging the country’s national treasury to classify bitcoin as an onshore asset when held by local, licensed cryptocurrency exchanges.
According to Luno, one of the country’s 5 top crypto exchanges, this move would enhance bitcoin’s position in South Africa’s financial regulatory framework and enable institutional investors to allocate a larger portion of their funds to the asset class.
“Internationally, cryptocurrencies are now just another recognised asset class to invest in along with stocks, government bonds and fiat currencies,” said Paul Harker, global head of legal and corporate strategy at Luno, in a recent statement.
“In the current constrained fiscal reality, our government has little room to manoeuvre. Pro-growth and forward-looking decisions are essential.”
🇿🇦 LIST🇿🇦 | Top Crypto Exchanges in South Africa From a User Perspective
Beginners may find @LunoGlobal to be the easiest to use, while more experienced traders prefer @VALRdotcom for its lower fees. @binance offers the most extensive options, but for seamless withdrawals,… pic.twitter.com/6c1s1q2fJU
— BitKE (@BitcoinKE) March 4, 2025
Luno warned that South Africa risks falling behind in recognizing crypto as a legitimate asset class for both institutional and individual investors. The exchange called on Finance Minister, Enoch Godongwana, to assist in changing this classification, arguing that it would, ‘at no cost to the fiscus,’ lead to the returns generated by these assets being ‘reinvested in South Africa, ultimately boosting tax revenue.’
🇿🇦MILESTONE | Luno Becomes the First Dedicated Crypto Service to Receive the South African Financial Services Provider License
This achievement marks a significant milestone, as Luno is said to be the first dedicated crypto service to gain recognition under the recent… pic.twitter.com/mLD5A3xyul
— BitKE (@BitcoinKE) April 13, 2024
According to South African regulations, digital currencies are not classified as either onshore or offshore assets. Luno noted that this ‘policy uncertainty‘ makes it challenging to report cross-border crypto transactions to the Reserve Bank.
While other developments, like the creation of a central bank digital currency, are still being considered by the Reserve Bank, cryptocurrencies do not hold fiat currency status in South Africa. Proposals such as including bitcoin in the country’s strategic national reserve have been dismissed by Reserve Bank Governor, Lesetja Kganyago.
🇿🇦BITCOIN | ‘I Have a Problem with a Lobby that Says Government Should Hold #Bitcoin,’ Says South Africa Central Bank Governor
According to Reuters, the crypto industry invested over $119M to advance legislation favorable to the sectorhttps://t.co/SiP2xQYmWs @SAReserveBank pic.twitter.com/wg0btW5TGO
— BitKE (@BitcoinKE) January 22, 2025
The South Africa Financial Sector Conduct Authority (FSCA) classified crypto assets as financial products requiring regulatory oversight in 2022, making South Africa the first African country to do so.
South Africa’s🇿🇦 Financial Regulator, FSCA, Declares Crypto Assets as a Financial Product
A crypto asset is used as an investment vehicle… and it resembles a financial product – you invest in it, you get returns from it.” – FSCAhttps://t.co/FOAe4pMmy3
— BitKE (@BitcoinKE) October 21, 2022
The regulations came after an Inter-Governmental Fintech Working Group (IFWG) was established and which drew up 25 recommendations on how to bring crypto assets into the South African regulatory remit in a phased and structured approach across 3 identified areas.
“As a regulator, we do not regulate technology. We regulate activity; we are technology agnostic.
It’s not for governments to decide which assets or products the consumer should be using,” Kganyago said recently.
The South African Regulatory Body, IFWG, Publishes a Position Paper Confirming Crypto Assets Regulation https://t.co/p6ZsdE4nAG via @Bitcoin KE
— Robert.Eth (@RobertMuoka) June 14, 2021
The Reserve Bank, in its response to local outlets, reiterated that multiple frameworks have been created by the Intergovernmental Fintech Working Group (IFWG) as part of efforts to develop comprehensive cryptocurrency regulations for South Africa. It stated,
“The classification of crypto assets as domestic or foreign for capital flow management purposes will be included in a framework to be decided on in due course.
“Luno acknowledges the forward strides already made in South Africa’s regulation of digital assets,” the company said in the statement.
“But ordinary South Africans and the fiscus have yet to experience the true benefit of the digital asset revolution that has boosted the economies of many other countries.”
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