BlockTower, the issuer of the rand-backed stablecoin ZARU, announced on Thursday that the exchange Luno has added the trading pairs ZARU/USDT and ZARU/USDC. This allows the rand to be in a continuous order book against two of the world's largest dollar stablecoins. However, just three days ago, the national treasury and the South African Reserve Bank published a draft guideline prohibiting South African companies from moving cryptocurrency across borders.
BlockTower's proposal is aimed precisely at the group excluded by these rules. The company claims that 'treasuries and trading desks' can now 'move volumes in and out of ZARU at attractive spreads, around the clock,' and the new pairs signify 'the movement of rand currency operations on the blockchain.' According to the Draft Guideline for Cross-Border Crypto Activities, published on August 3rd, only natural persons can conduct cross-border cryptocurrency transactions using a one-off discretionary allowance of 2 million rand or a foreign capital allowance of 10 million rand. Resident legal entities 'cannot engage in crypto asset transactions considered as capital import or export.'
If the draft is adopted as is, South African corporate treasuries will be among the groups unable to utilize the international market segment that ZARU has just opened up. These pairs are available to Luno clients in South Africa, Nigeria, Kenya, and Uganda, with more markets expected 'as regulations are cleared.' Currency Hub, a licensed financial services provider and crypto asset service provider, will act as the market maker, providing bilateral prices.
The parties involved in the listing are the same. BlockTower has three shareholders. Two of them are Luno, the exchange conducting the listing, and Sanlam, whose asset management division manages the ZARU reserves. The third shareholder remains unnamed. BlockTower CEO Vignesh Patel previously worked at Luno, where he held the position of independent member of the digital asset listing committee—the body that determines which tokens the exchange lists—and left this position after taking a new job.
In other words, the exchange partially owns the issuer of its token, which it has just introduced to its list; the issuer's reserve manager is also a shareholder; and the issuer's CEO left the exchange's listing committee. None of this is illegal, and all information is disclosed piecemeal. Collectively, this describes a market in the form of a rand currency substitution, where a small number of institutions occupy most of the positions.
BlockTower declined to comment on the draft rules or compare ZARU with competing rand stablecoins. Its shareholder was less reserved. Marius Wright, Luno's General Manager for Africa and Europe, stated that the guidance 'effectively prohibits companies from making cross-border payments using cryptocurrencies,' thereby cutting off South African firms from using stablecoins 'for any form of cross-border commercial operations, supply chain payments, or international trade.'
Wright emphasized that 'stablecoins enable instant, low-cost cross-border payments between businesses and represent one of the biggest use cases for cryptocurrency in a global industry with an annual transaction volume estimated at $33 trillion.' He added that 'the inability to account for corporate cross-border payments with stablecoins leaves South African business behind the international ecosystem adopting next-generation payment systems.'
BlockTower calls this the first listing of an institutional rand stablecoin on a major regulated exchange. This is based on a narrow interpretation. ZAR Supercoin, issued by Super Money SA, listed on the NYSE and backed by rand reserves in Absa, was announced as being tradable on Luno in November 2025. ZARU itself has been available on Luno since its launch on February 3rd—first OTC for qualified institutions, and then for retail clients through Luno's instant trading and EasyEquities function. The novelty is the order book itself.
The draft does not yet have legal force. The comment period closes on September 30th, and the guidelines cannot be implemented until the Capital Flow Management Regulations are published. These regulations, published on April 17th, drew strong criticism from heavy industry, with VALR CEO Farzam Ehsani calling the draft a 'worrying document' and questioning whether a rand-denominated token existing on a public blockchain would be considered a foreign asset simply due to its location.
This question now directly hangs over ZARU. Trading ZARU/USDT is economically a rand-dollar transaction. How the authorities interpret this—as domestic activity or as capital export—is not defined by this draft.
ZARU is not the first rand stablecoin in South Africa. That title belongs to ZARP, which launched in 2021 and was created from the opposite side of the market. It is co-founded by Simon Dingle and Kenny Inggs, and ZARP Stablecoin is issued, acting as a representative of the licensed financial services provider Inves Capital, while its treasury is managed by Old Mutual Wealth, which also provided liquidity to the token in 2023. It was designed for decentralized finance: its liquidity is mainly in on-chain pools, and it operates natively on Ethereum, Base, Polygon, and Solana. Its dashboard showed 81.5 million rand in circulation this week. Its crypto asset service provider license is pending.
ZARU chose the institutional route, launching in February with the participation of Sanlam, Luno, EasyEquities, and Lesaka Technologies. Its reserves are managed by Sanlam Specialised Asset Management and held at Standard Bank, and it is audited monthly by Moore Johannesburg. The last audit recorded the issuance of 58.4 million ZARU by the end of June.
Both of these volumes are small. A study published by Keyrock and Bitso in June shows that the total supply of all non-dollar stablecoins amounts to $2.2 billion, which is approximately 50 times larger than in 2023. The question now remains whether South African institutions are allowed to use any of these amounts outside the country.
The Reserve Bank's Monetary Policy Committee (MPC) decision to keep the repo rate at 7.0% was unexpected, despite inflation rising from 4.5% in May 2026 to 5.0% in June. The MPC explained this by noting that economic growth remains under pressure, mentioning risks of slowing growth in its statement.
The Committee indicated that the forecast derived from the Quarterly Projection Model (QPM) suggests that the key interest rate will remain relatively stable for the remainder of the year. According to the model, rate cuts are expected later when inflation drops to 3%, and rates will adjust to a neutral level. Furthermore, the MPC asserted that the stronger rand since the beginning of the year helped reduce fuel prices in July, and food inflation remained moderate, increasing by only 1.4%, while further significant declines in fuel prices were anticipated.
The MPC's decision to maintain the repo rate unchanged appears contradictory, as the statement acknowledged that services inflation remains a complex issue, with most components exceeding the 3% mark, including housing, transport, and insurance. The MPC also noted that various core inflation indicators point to intensifying inflationary pressures. Moreover, the latest survey by the Bureau of Economic Research showed an increase in inflation expectations, with short-term expectations being higher than long-term ones. All groups surveyed within this bureau predicted higher inflation, with the largest increase recorded among trade unions.
Despite the MPC's choice to keep interest rates unchanged, financial markets demonstrated disagreement. Following the MPC announcement, the rand sharply depreciated against the US dollar, euro, and British pound, reaching R16.80 to the dollar on Thursday and trading at a weak R16.96 to the dollar on Friday, closing the week at R16.83 to the dollar. The oil price shock situation also continued last week: disruptions on three fronts in the Strait of Hormuz, Red Sea, and Black Sea pushed Brent crude oil prices above $100 per barrel on Thursday. Although prices slightly decreased to approximately $98 per barrel, leading to a modest recovery in stock markets and lower bond yields on Friday, global markets remained under pressure.
On the JSE, the All Share Index (ALSI) lost 1.8% on Friday following the MPC's decision and the sharp rise in oil prices. Although the price of gold recovered from $4,007 last Monday to $4,073 on Friday, and platinum and palladium also strengthened, most JSE indices ended the week lower. Ultimately, the ALSI was nearly flat, showing a gain of only 0.15%, while remaining 14.3% below the level recorded before the US attack on Iran. A similar trend is observed across most major global indices.
Although the initial recovery of petrol prices to 3.57 per liter and diesel to 5.10 per liter looked promising at the beginning of July, the sharp rise in oil prices from $76 to $96 per barrel over the last four weeks, combined with the rand weakening by more than 40 cents last week, ruled out any prospects of fuel price decreases in August. By last Thursday, the recovery in diesel prices had already shrunk to 110 cents per liter. Meanwhile, 95 ULP petrol still showed a recovery of 41 cents per liter, but prices for both fuels are expected to rise next month, with the increase in diesel likely being sharper.
This week, domestic and global financial markets will focus on the Federal Open Market Committee (FOMC) of the US Federal Reserve's interest rate decision, which is scheduled for Wednesday. The general consensus suggests that this benchmark rate will remain unchanged at 3.75%. If the FOMC decides to raise interest rates, the rand, bonds, and South African stocks are likely to come under significant pressure. The Bank of England (BoE) is expected to announce its interest rate decision on Thursday, with markets predicting it will also leave rates unchanged at 3.75%. On Thursday, the US will release personal income and expenditure data, and the Eurozone plans to publish its June unemployment rate on the same day. Locally, Statistics South Africa (Stats SA) will publish government budget balance and June Producer Price Index (PPI) data on Thursday. The South African Reserve Bank will publish South Africa's trade balance on Friday.
