The South African Reserve Bank warns that booming local crypto and stablecoin use, paired with regulation gaps, could threaten financial stability.
Summary
- Nearly eight million South Africans now use crypto, with exchanges holding $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 financial stability risk, according to the central bank’s second Financial Stability Review of 2025.
The assessment cited rapid growth in domestic adoption and the increasing use of USD-pegged tokens in local trading activity. The country’s three largest cryptocurrency exchanges collectively reached 7.8 million registered users as of July, marking one of the highest levels of retail participation in the region, according to the report.
The exchanges held approximately $1.5 billion in client assets at the end of 2024, the central bank stated.
“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, referencing restrictions designed to manage capital flows into and out of the country.
South African Reserve Bank targets crypto
The central bank reported a structural shift in user behavior since 2022, with USD-pegged stablecoins overtaking unbacked cryptocurrencies as the primary trading pairs on South African platforms.
“Whereas Bitcoin and other popular crypto assets were the main conduit for trading crypto assets until 2022, USD-pegged stablecoins have become the preferred trading pair on South African crypto asset trading platforms,” the central bank stated.
The institution attributed the change to 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 in place for regulating global stablecoins and only partial regulations for cryptocurrencies. The South African Reserve Bank warned that the absence of clear rules may allow vulnerabilities to deepen without detection.
The central bank stated that until a comprehensive regulatory regime is introduced, the rapid expansion of crypto activity paired with the borderless characteristics of stablecoins could pose a threat to the country’s financial stability.
The central bank’s cautious stance contrasts with 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 companies.
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 highlighted a regulatory gap expanding alongside adoption. With nearly eight million users participating in crypto markets and stablecoin activity accelerating, the central bank indicated that a coordinated national strategy is needed to prevent risks from affecting the broader financial system.
