According to TechCentral, Luno has lodged a formal objection to the draft cross-border crypto regulations being prepared by the National Treasury and the South African Reserve Bank. The company argues that the draft treats payments made in stablecoins, crypto tokens that are pegged to a fiat currency such as the US dollar, as capital flows rather than current flows, a classification it says runs counter to South Africa’s commitments to the IMF and to the Reserve Bank’s own methodology.
Why the distinction matters
In foreign-exchange terms, a current flow covers payments for goods and services, while a capital flow relates to investment or financing movements. By labeling stablecoin payments as capital flows, the draft would subject them to stricter exchange-control rules, potentially limiting the ability of businesses to use stablecoins for routine cross-border transactions.
For South African SMEs that already rely on stablecoins to reduce transaction costs, avoid currency conversion fees, or receive payments from overseas clients, the change could mean additional paperwork, higher compliance costs, or even the inability to move funds across borders.
Luno’s core arguments
Luno’s General Manager for Africa, Marius Reitz, says the draft makes a “foundational error” by regulating crypto assets based on their form rather than their function. The draft groups bitcoin, stablecoins and utility tokens under a single regulatory regime, even though the Reserve Bank’s own research recognises that these assets serve different purposes.
In a submission filed before the public comment deadline of 30 September, Luno called for three separate treatment paths: bitcoin as an issuer-less commodity, stablecoins as payment instruments with a dedicated regulatory workstream, and utility tokens as infrastructure tools that should fall outside exchange-control rules.
Broader industry concerns
Luno is part of the Catastrophe coalition, which also includes VALR, AltCoinTrader and EasyEquities. The coalition’s two main objections mirror Luno’s: the draft would bar South African companies from moving crypto across the border in any direction, offering “no threshold, no exception and no way to apply”, and it would enforce a self-custody rule that allows crypto to leave a local platform but not return, a measure Luno says would push assets offshore.
Market makers, firms that keep local crypto prices aligned with global markets, are largely companies. If they are excluded, Luno warns that trading could become thinner and prices for buyers could rise.
International context
Regulatory frameworks in the UAE, Singapore, the United Kingdom and the European Union all permit companies to operate within their crypto regimes. Luno argues that South Africa’s draft contradicts the “positive bias” approach to capital flows that the Treasury and the Reserve Bank signalled in April.
Nevertheless, the draft does give credit for treating the purchase and holding of crypto on a locally licensed platform as a domestic activity, a point that Reitz highlighted in his April comments.
What the Reserve Bank says
Nicola Brink, who heads financial stability at the Reserve Bank, warned in November that crypto payments are borderless and could be used to circumvent exchange controls. The Reserve Bank told TechCentral on 9 September that the manual is “subject to refinement” and that its approach to stablecoins is still being worked out.
Reitz said Luno remains “committed to engaging further with the Reserve Bank and National Treasury to refine the framework, so that South Africa does not fall behind.”
For entrepreneurs and small-business owners, the outcome of this debate will determine whether stablecoins can continue to be used as a low-cost, fast payment method for imports, exports and cross-border services, or whether they will face the same restrictions that apply to traditional foreign-exchange transactions.
Read more about the implications for the tech sector in our Tech & Telco coverage.
The coalition’s public campaign also highlights that the draft imposes a “no threshold, no exception and no way to apply” rule, meaning South African firms would be unable to seek individual licences or exemptions for cross-border crypto transfers, a point Luno stresses in its submission. By removing any discretionary pathway, the draft could force businesses to abandon crypto entirely for international trade, potentially shifting volumes back to traditional banking channels. This pressure is amplified by the self-custody provision, which would let crypto leave a local exchange but block its return, a scenario Luno says would “push assets offshore” and erode the domestic market’s depth.
Under South Africa’s exchange-control framework, current-account transactions are normally recorded in the foreign-exchange market and subject to relatively light reporting, whereas capital-account movements trigger stricter approval processes and limits. If stablecoin payments are re-characterised as capital flows, firms must submit detailed applications to the Reserve Bank, obtain clearance and possibly provide collateral, steps that can add weeks to settlement times. The draft also groups bitcoin, stablecoins and utility tokens together, despite Reserve Bank research that distinguishes their economic functions, thereby ignoring the nuanced treatment that existing regulations afford to each asset class.
The manual’s treatment of buying and holding crypto on a locally licensed platform as a domestic activity is one of the few concessions noted by Luno, who points out that this aligns with the Treasury’s “positive bias” stance on capital flows announced in April. However, the broader draft still bars companies from moving crypto in either direction across borders, effectively closing the loop for any outbound or inbound payments. This restriction could compel market makers, who are largely corporate entities, to exit the South African market, leading to thinner order books and higher spreads for local traders.
Regulators have signalled that the draft is “subject to refinement”, with the Reserve Bank indicating on 9 September that its approach to stablecoins remains under review. The next steps involve a formal consultation period that ends on 30 September, after which the Treasury and Reserve Bank will consider stakeholder feedback before finalising the capital-flow management regulations. Once published, the final manual will dictate the compliance timeline for firms, who will need to adjust internal systems, reporting procedures and possibly restructure their crypto-related services to meet the new classification requirements.
