South Africa’s Finance Minister Enoch Godongwana indicated that the government may revise controversial draft cryptocurrency regulations after the National Treasury and the South African Reserve Bank received thousands of public comments.
In a budget policy statement delivered to Parliament on Wednesday, Oct. 21, Godongwana said the volume of feedback made clear that a different approach was needed.
“We received thousands of comments, and it is clear that we need to take a different approach to these amendments,” Godongwana said. “We must aim to shift away from pre-approvals. Instead, we must assess transactions for legitimacy and tax compliance.”
Draft Rules Drew Industry Criticism
The initial proposals were set out in the draft Capital Flow Management Regulations 2026 and a subsequent draft Crypto Assets Manual. They sought to combat financial crime and monitor capital leaving the country through blockchain channels.
Critics warned that the framework was overly restrictive, risked pushing digital transactions into opaque and unregulated channels, and could undermine South Africa’s standing in the global digital economy.
A key concern was a proposal that would have given the government authority to require individuals holding crypto assets above an unspecified threshold to declare their holdings and potentially force sales to the state in exchange for South African rands. Although regulators had promised to define those thresholds in the draft manual, no specific figures were provided when the document was published.
The draft manual also proposed flagging transfers between domestic crypto asset service providers and offshore platforms or non-custodial wallets. Under those proposed rules, inward and outward transfers involving non-custodial wallets would have been banned.
Industry analysts noted that banning transfers to self-custody wallets would effectively block South Africans from interacting with decentralized finance protocols.
Platforms Called for a Broader Overhaul
Luno, a prominent cryptocurrency exchange operating in the region, cautioned that the rules as drafted would inflate costs for everyday users, lock local enterprises out of blockchain innovations, and strip regulators of oversight.
Farzam Ehsani, co-founder and chief executive of exchange platform VALR, advocated a broader overhaul and called on authorities to abolish South Africa’s decades-old exchange control regime entirely. He pointed to former President Nelson Mandela’s 1996 State of the Nation Address, in which Mandela committed to gradually phasing out apartheid-era capital controls.
Ehsani urged regulators that if capital controls remain, they should be applied on a technology-neutral basis rather than restricting specific digital tools.
Revised Draft Expected After Consultations
Godongwana signaled that future regulatory guidelines will align more closely with standards set by the international Financial Stability Board.
“Consultations will commence, with the aim of publishing a revised second draft of the regulations for further input,” he said.
