South Africa Proposes Banning Corporate Cross-Border Stablecoin Transfers
South Africa wants to ban companies from moving stablecoins abroad, while individuals are allowed to keep their allowances up to R2m. Draft rules propose prohibiting companies from crossing borders with stablecoins, a move that has sparked a legal challenge from exchanges like VALR and Luno.
Proposed Regulations:
- Ban on Corporate Transfers: South African companies would not be permitted to make cross-border crypto transfers.
- Individual Allowance: Individuals can still transfer up to 2 million rand ($120,000) annually abroad without pre-clearance and up to 10 million rand with tax authority approval.
Industry Response:
- VALR's Warning: Farzam Ehsani, CEO of VALR exchange, states that blocking corporate use on regulated venues is likely to drive transactions underground or offshore.
- Luno's Concern: Luno argues that executive branch changes to a 65-year-old framework undermine democratic oversight and threatens legal action if Treasury bypasses parliament.
- Absa's Support: One of South Africa's largest banks, Absa, sees the rules as overdue clarity, indicating potential comfort with the constraint on competing settlement rails.
Central Bank's Justification:
Reserve Bank Governor Lesetja Kganyago argues that exempting crypto would create an unfair distortion. He emphasizes the need for common rules and a rigorous system of reporting and permissions for all, aligning with South Africa's existing capital flow measures.
Historical Context:
In April, South Africa scrapped a previous system, providing a contrast to the current proposal just four months later.