Economist: South Africans may abandon rand for crypto

Dawie Roodt, director and chief economist at Efficient Group, warned that proposed capital flow rules from the National Treasury could drive South Africans away from the rand and into cryptocurrencies and stablecoins. His remarks followed a Treasury statement on May 15 defending the draft rules.

The draft Capital Flow Management Regulations would require residents to report crypto holdings above an unspecified threshold and give officials powers to search, seize and, in specific cases, force disposals. The draft also includes potential penalties for breaches, including criminal sanctions. Treasury said the rules do not intend to criminalize possession of crypto assets or to apply the regulations retrospectively.

Roodt argued the rules are effectively unenforceable for assets held in self‑custody on blockchains. He said regulators cannot compel disclosure of private keys or access to wallets users control. “They cannot stop me anymore,” he said, adding a question about how authorities would obtain passwords or open private devices.

The economist said continued reliance on traditional exchange controls will push people to other currencies and to stablecoins that offer lower transaction costs and direct control of funds. He said some users would choose alternatives to the rand to avoid limits and reporting requirements.

Roodt acknowledged cryptocurrencies can be used for criminal activity but said stablecoins can provide low‑cost, round‑the‑clock transfers for people without bank accounts. He pointed to developments in the payments industry, noting that large card companies are investing in stablecoin infrastructure.

Treasury rejected claims the draft regulations are aimed at seizing private holdings. The department said forced disposals would be limited to cases where an offense has been committed and that concerns about retrospective application are misplaced. Officials said a separate draft manual on cross‑border crypto transactions will be published for public comment to clarify which activities qualify as cross‑border flows and what obligations authorized service providers will have.

The debate reflects tensions between maintaining capital controls and addressing risks such as money laundering. Regulators are preparing specific guidance on how cross‑border crypto transactions will be treated under existing capital rules.