South Africa issues draft rules for cross-border crypto

By Colleen Goko

JOHANNESBURG, Aug 3 (Reuters) - South Africa took a step on Monday toward bringing cryptocurrency into its financial rulebook, releasing ‌draft guidelines that for the first time spell out when ‌moving crypto across borders becomes a regulated and reportable event.

The draft Crypto Asset Manual, published ​jointly by the National Treasury and the South African Reserve Bank, builds on a broader overhaul of the country's capital flow rules proposed in April.

The move comes as crypto use deepens in South Africa. The country already has ‌hundreds of licensed virtual asset ⁠service providers, according to blockchain analytics firm Chainalysis. Major banks are also in advanced stages of developing crypto products ⁠for institutional clients.

The practical effect is that if you want to send crypto offshore, you will soon need to do it through an authorised provider, ​and the ​transaction will be reported to the ​Reserve Bank's Financial Surveillance Department, ‌known as FinSurv.

The rules are designed to prevent crypto assets from being used as a backdoor around South Africa's existing financial controls and to help authorities detect and disrupt illicit financial flows.

Under the proposed rules, a crypto transaction only becomes a cross-border event when assets move from a local ‌authorised Crypto Asset Service Provider to an ​offshore provider, or into a private, non-custodial ​wallet.

Buying or selling crypto in ​rand through a local provider would not trigger a ‌report. For now, only individuals would be ​permitted to move ​crypto assets offshore, and only within their existing foreign currency allowances.

The SARB said the framework does not give crypto legal tender status and does ​not yet distinguish between ‌different types of crypto assets, with further research ongoing.

Interested parties have ​until September 30 to submit comments.

(Reporting by Colleen Goko; editing ​by Marc Jones and Sharon Singleton)