Luno urges South Africa to pass crypto law through Parliament

Cryptocurrency exchange Luno filed a formal challenge in 2026 to South Africa’s draft capital flow regulations, arguing the National Treasury and the executive cannot lawfully bring digital assets under ministerial regulation and that Parliament must pass a law instead. The draft regulations were published jointly by the National Treasury and the South African Reserve Bank and opened for public comment.

The draft would replace the 1961 Exchange Control Regulations with a risk-based system to monitor cross-border transactions and target illicit finance. Luno said the executive-led approach bypasses the parliamentary process for rules that affect property and privacy rights.

Under the proposed rules, breaches could carry penalties of up to five years in prison, a fine of about 1 million rand, or both. Luno identified three enforcement powers it finds particularly concerning: warrantless asset seizure, forced liquidations and sanctions that could end a business. The exchange warned those powers could create legal uncertainty for platforms, users and institutional participants in South Africa’s crypto market.

Luno also criticised the draft’s treatment of digital assets. The Treasury text treats tokens uniformly rather than distinguishing them by economic function, the company said. Luno raised concerns that equating bitcoin, stablecoins and tokenised real-world assets could affect market liquidity and technology development. The submission referenced the central bank’s policy roadmap, which recognises stablecoins as a possible low-cost, cross-border payment option.

The company flagged operational problems with proposed reporting requirements for transactions above an unspecified threshold, saying the rules would impose an unmanageable administrative burden because large volumes of transactions are executed in seconds. Luno cautioned that restrictive rules could push activity offshore or underground, making it harder for regulators and tax authorities to oversee the market.

To address those issues, Luno proposed specific changes. The exchange urged that the final framework be enacted by Parliament as an Act, that crypto held on South African-licensed exchanges be designated as onshore assets, and that rules distinguish between asset classes by economic function. Luno recommended dropping forced-sale provisions and warrantless seizure powers and allowing non-resident trading firms to operate under registration to preserve liquidity.

Marius Reitz, Luno’s general manager for Africa, said: “By proceeding through ministerial regulation, the executive branch effectively bypasses the democratic process for changes that will affect the fundamental property and privacy rights of millions of South Africans. They should, in our view, have been enacted as a new Act passed through Parliament.”

The National Treasury and the South African Reserve Bank will review public submissions before finalising the regulations. Parliament, the Treasury and the Reserve Bank will consider the comments as South Africa updates its exchange control regime while addressing cross-border risks and market functioning.