National Treasury and the Reserve Bank will rewrite their draft rules on moving crypto assets across South Africa's borders, after receiving what finance minister Enoch Godongwana called "thousands of comments".

"It is clear that we need to take a different approach to these amendments," he told Parliament in his medium-term budget policy statement on Wednesday. "We must aim to shift away from pre-approvals. Instead, we must assess transactions for legitimacy and tax compliance."

A revised second draft will be published for comment, but Godongwana gave no timeline and did not say which parts will change.

The plan began in February's budget, when Treasury said it would bring crypto assets into its system for managing money flowing in and out of the country. The Reserve Bank had warned that crypto offered a way around exchange controls, and said nearly R63-billion had moved from South African bitcoin wallets to foreign ones since January 2019. Draft regulations followed in April.

They would replace the exchange control rules that date from 1961 and would require every buyer of crypto to declare in writing when and how it was bought and where it is held. They also gave officials wide powers to search for and seize currency, crypto, gold or securities, with fines of up to R1-million and up to five years in prison for breaking the rules.

The Reserve Bank's draft crypto manual in August added the detail. Individuals could send crypto offshore through licensed local providers using their R2-million annual discretionary allowance, or up to R10-million with approval and a tax check. Companies would not be allowed to move crypto across the border at all, in either direction.

That threatened rand stablecoins built for company treasuries, such as Zaru, which launched in February with backing from Sanlam, Luno, EasyEquities and Lesaka. Godongwana now says the approach should also follow guidance from the Financial Stability Board, the international body that coordinates financial rules for the G20.

TechCentral's Duncan McLeod reported the shift and traced the drafts back to February's budget. VALR chief executive Farzam Ehsani had called the April regulations "an alarming document", pointing to the search and seizure powers. Luno argued in its submission that treating all stablecoin payments as capital flows, when the same payment through a bank would not be, may clash with South Africa's commitments to the International Monetary Fund, and objected to the ban on companies moving crypto offshore.

The most useful lesson here is not about crypto. Thousands of businesses and individuals took the time to comment on a draft, and the government changed course. That is the same point we made when the Constitutional Court struck down the Public Procurement Act because Parliament skipped proper public participation: comment periods are where policy is actually decided. The new direction is more practical.

Checking whether a transaction is legitimate and tax-compliant, instead of asking permission in advance, is closer to how ordinary bank transfers already work. It also leans on the same Financial Stability Board guidance the FSCA is waiting on for AI rules.

For crypto businesses the biggest open question is whether the ban on companies moving crypto offshore survives, because that decides whether corporate stablecoins can work here at all. Until the second draft appears, firms that built around the original rules, such as FNB's closed crypto trading, have no reason to change their design yet.

You might also like our piece on the original cross-border crypto proposal, interest-free loans against stocks, and Moody's signalling a possible upgrade.

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