A coalition of South Africa's largest regulated crypto platforms has brought its fight into the public sphere by forming an alliance and launching a petition against the draft rules. These rules could potentially prohibit local companies from conducting cross-border payments using crypto assets.
The coalition named itself Catastrophe — Crypto Asset Taskforce for Advancing Sound, Technology-Neutral Regulation for Opportunity, Prosperity and a Healthy Economy. It includes companies VALR, Luno, AltCoinTrader, and EasyEquities, as well as professors, lawyers, economists, and entrepreneurs. The campaign launch is scheduled for Wednesday, September 9, three weeks before the comment period ends on September 30.
The issue concerns the draft guidelines for cross-border crypto activities, which were published by the national Ministry of Finance and the Reserve Bank's Financial Surveillance Department in early August. Draft capital outflow management rules, which will replace the Export Control Regulations of 1961, are also being discussed.
The coalition raises two main objections. The first is that South African firms could lose the ability to use regulated crypto channels for cross-border operations that are fully legal through the banking system. Local businesses can own and trade cryptocurrency domestically, but they are prohibited from participating in transactions considered capital import or export. For example, a software company invoicing an American client in dollar-denominated stablecoins would be unable to legally receive the money through a licensed local provider.
The second objection, which the campaign calls the 'self-custody one-way street,' is that while a person can move crypto assets from an authorized South African provider to a personal wallet, returning those assets is deemed unacceptable. The campaign states on its website: 'Good regulation should encourage activity to return to the regulated system, not create a one-way door out of it.'
Kganyago's Words
Catastrophe's central argument is based on an idea borrowed from the Reserve Bank's manager. At the MTN Group Fintech summit last week, Lesetja Kganyago outlined the concept of the central bank shifting from entity-based regulation to activity-based regulation within the payment system. He stated: 'The principle is simple: similar payment operations should fall under similar regulatory expectations, regardless of whether they are conducted by a bank or a fintech company.'
The coalition believes that failing to apply this principle to cross-border payments is a deviation from technology-neutral regulation. In their view, banks, authorized dealers, and licensed crypto providers may require different operational rules, but equivalent activities should attract equivalent permissions.
According to the campaign, hundreds of licensed crypto asset service providers operate in South Africa, employing thousands of people and paying billions of rand in corporate income tax, PAYE, and VAT. Catastrophe warns that these jobs will be at risk if the rules are adopted in their current form, and billions in foreign investment are already pending, although no specific investors are named.
Usually, regulatory lobbying happens discreetly, through written submissions and closed meetings. When journalists asked why the industry decided to go public, VALR CEO Farzam Ehsani, speaking as a signatory rather than on behalf of the campaign, replied that the stakes justified such a move. He told TechCentral that the industry has interacted with politicians for years and will continue to do so, but the drafts contain potentially far-reaching consequences for South African businesses, consumers, and the broader digital asset industry. 'It is important that those who can be affected understand what is being proposed and have the opportunity to voice their opinion,' he added. He clarified that the campaign aims to broaden participation in consultations.
Ehsani presented a similar argument in a submission last month, arguing that banning legitimate corporate activity through regulated providers 'would likely push transactions underground or abroad' and deprive authorities of desired transparency. Previously, he advocated for the complete abolition of currency controls while maintaining reporting obligations.
Commercial implications emerged on Tuesday, September 8, when Luno announced a partnership with the American regulated digital clearinghouse Meridian. This will allow institutional clients to mint stablecoins upon receipt of a dollar payment. Dollars received via ACH, FedWire, or Swift are automatically minted into USDC or USDT and credited to the client's Luno wallet, replacing over-the-counter processes that can take hours or days. The launch will first occur in South Africa, utilizing the Class F digital asset license recently obtained by Luno in Bermuda.
Paul Harker, Luno's Global Head of Legal and Corporate Strategy, noted: 'The appeal of stablecoins to institutional treasurers is less about the cryptocurrency itself and more about control. Businesses can plan their cash flow only if they can receive dollars when they need them, not just when their bank, counterparty, and correspondent network are all open.'
Luno also pointed out in the same announcement that the draft rules could make the product unavailable locally, as the proposed pre-approval would negate the purpose of instant settlement. This demand is not theoretical: the IMF reported in June that dollar-pegged tokens have become a significant cross-border channel in Nigeria, where dollar liquidity shortages leave businesses with few alternatives.
Bypassing Currency Controls
Part of the complaint relates to timing: Mastercard closed its acquisition of BVNK worth up to $1.8 billion in August, marking the largest deal in a series of stablecoin deals by global payment networks.
Catastrophe's minimum requirement is the creation of a level playing field: allowing local businesses to conduct cross-border operations in cryptocurrency, permitting asset movement in both directions between regulated platforms and self-custody, and regulating risk, not technology. Their ideal is South Africa's complete abandonment of currency controls. They stated they would dissolve after achieving the best outcome.
The Ministry of Finance and the Reserve Bank argue that the approach to crypto assets aims to minimize regulatory arbitrage between entities engaged in cross-border business. When the Ministry of Finance first signaled a change in February, it clearly identified the problem: 'Since crypto payments have no borders, they represent an opportunity to bypass currency controls.'
Thus, both sides aim for the same thing: activity in the cryptocurrency sector within a regulated system where it can be tracked. However, they disagree on which set of rules will allow this activity to remain within the system.