South Africa’s central bank warns missing crypto and stablecoin rules

South Africa’s central bank is sounding the alarm on digital assets again. It flagged off the risk of creating a blind spot in the country’s financial system amid the rapid rise of crypto and stablecoins. This turns out to be one of the challenges that the watchdog is still unable to manage.

This comes in when the global crypto market is dealing with high selling pressure and Extreme fear among investors. The cumulative market cap dipped marginally over the last 24 hours but managed to remain above $3 trillion mark. However, the biggest crypto, Bitcoin, dropped by almost 2% to hover around $87k.

SARB flags missing crypto rules

According to a report, the South African Reserve Bank (SARB), in its biannual Financial Stability Review, mentioned the absence of a full regulatory framework for crypto assets. This has become a material risk, particularly as traders shift away from volatile coins like Bitcoin toward dollar-linked stablecoins.

Herco Steyn, SARB’s lead macroprudential specialist, pointed out the pretty straightforward problem. He highlighted that crypto is borderless, fast-moving, and entirely digital, while South Africa’s decades-old exchange control rules were never built for it. He added that “Without a complementary and full regulatory framework, we do not have sufficient oversight.” The progress in this sector is expected by 2025, but the system is still not fit for it.

The report added that the SARB and National Treasury are now pushing ahead with new rules. They will aim at tightening rules of cross-border crypto flows and bringing digital assets directly under exchange-control regulations. It is expected to prevent traders from using crypto rails to move capital offshore undetected.

ECB joins SARB in warning

South Africa seems to be becoming one of the world’s most active stablecoin markets. Before 2022, Bitcoin and other top cryptos used to dominate the market. Sablecoins are now reportedly replacing them. The numbers are stark and change the perspective completely. SARB data shows that the trading volumes in stablecoins have jumped from under 4 billion rand in 2022 to nearly 80 billion rand ($4.6 billion) by October.

Data depicts that platforms like Luno, VALR, and Ovex now serve 7.8 million registered users, dominating the South African market. Their holding has breached more than 25.3 billion rand in assets in 2024. The global market is in a deep drawdown but the stablecoin market surged marginally. Its total market cap has breached $314 billion mark. Tether’s USDT is leading the race with $184.4 billion cap. Circle’s USDC stands second in the tally with almost $75 billion.

Bitcoin has plunged from a $126,000 record in early October to roughly $87,000. BTC is trading at an average price of $86,664 at the press time. Ether is down more than 40% from August. ETH is trading at an average price of $2,911 at the press time.

Other regulators are also drawing similar conclusions. The European Central Bank this week warned that stablecoins are posing structural threats to banking systems. These tokens pull deposits away from lenders and redirect liquidity into instruments backed by the US Treasuries. The ECB said the shift could leave banks more exposed to volatile funding conditions.

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