South African Reserve Bank Flags Stablecoins and Crypto as Financial Stability Risks

Show description: The South African Reserve Bank flagged crypto assets and stablecoins as potential sources of systemic risk, citing rapid consumer adoption, rising stablecoin volumes near 80 billion rand by mid‑2025, and an estimated 7.8 million domestic users on major exchanges. The review identified a shift from speculative trading to payments, remittances, and merchant settlement that creates transmission channels into traditional finance. The bank reported missing core rules for stablecoins, including requirements for reserve composition and verification, clear redemption mechanics, and standardized disclosures for issuers and intermediaries. The review described fragmented oversight across the Reserve Bank, the Financial Sector Conduct Authority, and National Treasury, and said on‑chain activity and cross‑border transfers create data gaps that limit visibility into volumes, counterparties, and concentration risks. The Reserve Bank warned that borderless digital asset flows can undermine exchange control frameworks and create unreported capital movements, AML/CFT weaknesses, and distortions in the foreign exchange market. The review identified market‑structure concentration in a relatively small group of stablecoin issuers, custodians, and on‑ and off‑ramps that handle a large share of local flows and could cause liquidity strains and indirect spillovers to banks and payment providers. The Financial Sector Conduct Authority has treated crypto assets as financial products since 2022 and has been licensing crypto service providers, while the Reserve Bank and National Treasury are drafting updates to include crypto and stablecoins in Exchange Control Regulations and expect a stablecoin framework consultation in 2026. The review advised firms to map exposures to stablecoin liquidity, issuer concentration, custodians, and counterparties; deploy on‑chain analytics and travel‑rule solutions for sanctions screening and provenance checks; and prepare for licensing upgrades, periodic reserve attestations, segregation of client assets, and enhanced cross‑border reporting and reconciliation. The review called for coordinated domestic supervision and alignment with international standards to reduce regulatory arbitrage and improve reporting interoperability. 

Source: https://theweb3.news/policy/south-africa-crypto-stablecoin-risk/

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