South Africa’s Central Bank Says Crypto Risks Growing Faster Than Oversight
The South African Reserve Bank (SARB) has identified crypto assets and stablecoins as a new and material financial stability risk, citing rapid growth in domestic adoption and the increasing prominence of USD-pegged tokens in local trading activity.
The assessment was published on Tuesday in the central bank’s second Financial Stability Review of 2025.
According to the report, the country’s three largest cryptocurrency exchanges collectively reached 7.8 million registered users as of July, marking one of the highest levels of retail participation in the region.
Total registered users across the top crypto exchanges in South Africa (Source: South African Reserve Bank)
The exchanges collectively held roughly $1.5 billion in client assets at the end of 2024 as well.
SARB said the sharp rise in crypto participation requires closer scrutiny, particularly given the digital and borderless characteristics of these assets.
“Due to their exclusively digital – and therefore borderless – nature, crypto assets can be used to circumvent the provisions of the Exchange Control Regulations,” the central bank noted, referencing restrictions designed to manage the flow of capital into and out of South Africa.
Also read: Binance South Africa Enforces New ID Requirements for Crypto Transfers
Stablecoins Overtake Bitcoin as Primary Trading Pair
While mainstream crypto assets such as Bitcoin, Ether, XRP and Solana continue to see significant activity in the country, SARB’s report highlights what it calls a “structural shift” in user behavior.
Since 2022, USD-pegged stablecoins have overtaken unbacked cryptocurrencies as the primary trading pairs on South African platforms.
“Whereas Bitcoin and other popular crypto assets were the main conduit for trading crypto assets until 2022, USD-pegged stablecoins have become the preferred trading pair on South African crypto asset trading platforms,” the central bank stated.
It attributed that change to the “notably lower price volatility of stablecoins compared to unbacked crypto assets,” a dynamic increasingly appealing to both retail traders and higher-volume market participants.
The shift mirrors global trends in emerging markets, where stablecoins are frequently used as a hedge against currency volatility and as an on-ramp into offshore financial ecosystems. SARB’s findings indicate that the same behaviors are growing rapidly in South Africa.
Also read: Luno Calls for Bitcoin to Be Classified as an Onshore Asset in South Africa
Regulatory Gaps Could Allow Risks to Build “Undetected”
The Financial Stability Board (FSB), the G20-aligned body responsible for monitoring global financial risk, reported in October that South Africa currently has “no framework in place” for regulating global stablecoins and only “partial regulations” for cryptocurrencies. SARB echoed these concerns, warning that the absence of clear rules may allow vulnerabilities to deepen without detection.
The central bank emphasised that until a comprehensive regulatory regime is introduced, the rapid expansion of crypto activity—paired with the borderless characteristics of stablecoins—could pose a threat to the country’s wider financial stability.
Also read: South African Crypto Leaders Demand for Revision of Regulation 28 To Permit Digital Asset
Government Agencies Taking a More Supportive Stance
SARB’s caution stands in contrast to a more open-minded approach within certain segments of South Africa’s government. While the central bank has been historically wary of digital assets—a stance underscored in 2017 when deputy governor Francois Groepe argued that issuing a sovereign digital currency would be too risky—regulators in other departments have taken steps to legitimize and supervise the industry.
In 2022, the Financial Sector Conduct Authority (FSCA) formally designated cryptocurrency as a financial product under South African law. This shift paved the way for licensing requirements, bringing crypto companies under the purview of the country’s broader financial regulatory framework.
Since then, the FSCA has granted licenses to exchanges and service providers, signalling a willingness to integrate digital assets into the established financial system.
Outlook: Growing Adoption Without Completed Regulation
South Africa is emerging as one of the most active crypto markets in Africa, but SARB’s latest assessment sheds light on a regulatory gap widening alongside adoption. As usage of Bitcoin, Ether, and especially USD-pegged stablecoins expands, the central bank argues that a coordinated national strategy is essential to prevent risks from spilling into the broader financial system.
With nearly eight million users already participating in crypto markets—and stablecoin activity accelerating faster than any other segment—the race to establish a full regulatory framework now appears to be a pressing priority for South African authorities.
