The South African Reserve Bank warns that the growing use of local crypto and stablecoins, coupled with regulatory gaps, could threaten financial stability.
Summary
- Nearly eight million South Africans now use crypto, while exchanges hold $1.5 billion in assets.
- Stablecoins have overtaken bitcoin as the primary trading pair due to lower volatility.
- Regulators warn that the lack of framework for global stablecoins poses growing systemic risks.
The South African Reserve Bank has identified cryptocurrency assets and stablecoins as a material risk to financial stability, according to the central bank’s second Financial Stability Review of 2025.
The review cited the rapid growth of domestic adoption and the increasing use of USD-pegged tokens in local trading activities. The country’s three largest cryptocurrency exchanges reached a combined 7.8 million registered users in July, marking one of the highest levels of retail participation in the region, according to the newspaper. report.
The exchanges held about $1.5 billion in customer assets at the end of 2024, the central bank said.
“Due to their exclusively digital – and therefore borderless – nature, crypto assets can be used to circumvent the provisions of the Exchange Control Regulations,” the South African Reserve Bank noted, referring to restrictions designed to manage capital flows into and out of the country.
The South African Reserve Bank focuses on crypto
The central bank reported a structural shift in user behavior since 2022, with USD-pegged stablecoins overtaking unbacked cryptocurrencies as the top trading pairs on South African platforms.
“While Bitcoin and other popular crypto assets were the main channel for crypto asset trading until 2022, USD-pegged stablecoins have become the preferred trading pair on South African crypto asset trading platforms,” the central bank said.
The institution attributed the change to the lower price volatility of stablecoins compared to unbacked crypto assets. Mainstream cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), XRP (XRP) and Solana (SOL), continue to see significant trading activity in the country, according to the report.
The Financial Stability Board reported in October that South Africa currently has no framework for regulating global stablecoins and only partial regulation of cryptocurrencies. The South African Reserve Bank warned that the lack of clear rules could allow vulnerabilities to increase unnoticed.
The central bank stated that until a comprehensive regulatory regime is in place, the rapid expansion of crypto activity coupled with the borderless characteristics of stablecoins could pose a threat to the country’s financial stability.
The central bank’s cautious stance is in stark contrast to regulatory developments in other government departments. In 2022, the Financial Sector Conduct Authority formally designated cryptocurrency as a financial product under South African law, establishing licensing requirements for crypto businesses.
The authority has since granted licenses to exchanges and service providers. In 2017, then-Deputy Governor Francois Groepe stated that issuing a sovereign digital currency would be too risky according to previous reports.
The South African Reserve Bank’s assessment found that in addition to adoption, there is also a regulatory gap. With nearly eight million users participating in the crypto markets and stablecoin activity increasing, the central bank has indicated that a coordinated national strategy is needed to prevent risks from affecting the broader financial system.
