Coalition warns new rules risk crypto catastrophe

A newly formed coalition called CATASTROPHE fears proposed cross-border regulations could be detrimental to South Africa's crypto ecosystem. The coalition warns that these regulations, currently under review by the National Treasury and South African Reserve Bank (SARB), could jeopardize thousands of jobs, impact millions of crypto holders, and cost the government billions in tax revenue.

The CATASTROPHE alliance, which includes crypto firms, academics, and legal experts, is urging these institutions to reconsider their stance. "Thousands of jobs in South Africa would be threatened, millions of South African crypto holders would be adversely impacted and billions [in] tax revenues to the South African Revenue Service could disappear if these draft regulations are implemented as currently drafted," the coalition asserts.

The Crypto Asset Taskforce for Advancing Sound, Technology-Neutral Regulation for Opportunity, Prosperity and a Healthy Economy (CATASTROPHE) is composed of crypto service providers like VALR, Luno, AltCoinTrader and EasyEquities, as well as academics, lawyers, economists, and members of the public. The group supports regulation that promotes transparency, reporting, tax compliance, and anti-financial crime measures, but opposes rules that discriminate against crypto simply due to the technology it employs.

Launched just days ago, CATASTROPHE is seeking public endorsement for a campaign to convince the National Treasury and SARB to modify the proposed crypto regulations before the end of the month.

The South African Reserve Bank's move aims to align digital currency with the 1961 Currency and Exchanges Act, a law dating back to 1933. However, legal challenges over whether crypto should be regulated under this act are ongoing. In a 2025 case, Judge Mandlenkosi Motha ruled that crypto is not subject to South Africa's foreign exchange regulations.

But, in 2026, Judge Stuart Wilson disagreed, stating that Bitcoin is considered capital under the country's exchange control framework and can be subject to forfeiture for regulatory breaches.

The Draft Capital Flow Management Regulations, which close for public comment in June, were published by National Treasury along with a draft manual governing cross-border crypto transactions. CATASTROPHE argues that these proposed changes are too restrictive, potentially harming businesses, jobs, economic participation, and isolating South Africa from the global digital economy.

The coalition claims the draft rules would impose two major restrictions: the first prohibiting local businesses from using crypto for international transactions, limiting their competitiveness globally; and the second restricting individuals from moving crypto from local providers to self-hosted wallets and back to regulated South African platforms.

CATASTROPHE suggests that government should adopt a technology-neutral approach, similar to what SARB governor Lesetja Kganyago proposed at the MTN Group Fintech 2026 Summit. Kganyago suggested that similar payment activities should be subject to the same regulatory expectations whether performed by a bank or a fintech, a principle CATASTROPHE says should apply to cross-border payments as well.

They argue that failing to apply this principle would be inconsistent with sound, technology-neutral regulation, and would disadvantage South African businesses and residents by preventing them from benefiting from global digital payment advancements.