Crypto exchange Luno has raised a new objection to draft cross-border crypto rules in South Africa. The rules come from national treasury and the South African Reserve Bank.
Luno said the draft treats stablecoin payments in a way that may clash with South Africa’s IMF commitments. Stablecoins are crypto tokens linked to a currency, usually the US dollar.
Under the draft, Luno said, all stablecoin payments would count as capital flows. They would not count as current flows, which cover payments for goods and services. The same invoice paid in dollars through a bank would not be treated this way.
Luno argued that treating payments differently only because of the tool used raises questions. It said this may not match South Africa’s commitments to the International Monetary Fund or the Reserve Bank’s own methods.
Luno said the problem comes from a basic error. It said the rules look at the form of crypto assets rather than what they do.
According to Luno, the manual puts bitcoin, stablecoins and utility tokens under one set of rules. Utility tokens give holders access to a service on a blockchain network. Luno said the Reserve Bank’s own research and frameworks accept that these assets are different.
Luno has made this argument before. In April, its general manager for Africa, Marius Reitz, criticised draft capital flow management regulations.
Luno’s submission on those regulations called for bitcoin to be treated as a commodity with no issuer. It said stablecoins should be payment tools with their own regulatory track. It also said utility tokens should be seen as infrastructure tools outside exchange control.
The new complaint is part of Luno’s submission on the draft crypto asset manual for cross-border activities. Luno filed it before public comment closed on 30 September.
The point goes further than the case made by the Catastrophe coalition. Its members include VALR, Luno, AltCoinTrader and EasyEquities. The coalition’s public campaign is built around two other objections.
Luno backs the coalition on both of them. The draft bars South African companies from moving crypto across the border in any direction. Luno said companies get “no threshold, no exception and no way to apply”.
Luno also opposes the self-custody rule. Under it, crypto can move from a local platform to a customer’s own wallet but cannot come back. Luno said that rule “will actually push assets offshore”.
Luno said market makers, which keep local crypto prices in line with global ones, are almost all companies. It argued that shutting them out would thin trading and raise costs for buyers.
Luno said the UAE, Singapore, the UK and the EU all include companies in their crypto frameworks. It said the ban goes against a “positive bias” approach to capital flows. Treasury and the Reserve Bank signalled that approach in April.
Luno did welcome one part of the draft. Under it, buying and holding crypto on a locally licensed platform counts as domestic. Reitz had asked for this in April.
The authorities are worried that crypto could be used to get around exchange controls. Nicola Brink, head of financial stability at the Reserve Bank, warned about this last November.
“As crypto payments are borderless, they present an avenue to circumvent exchange controls,” Brink said at the time.
The Reserve Bank told TechCentral on 9 September that the manual remains “subject to refinement”. It said its approach to stablecoins is still being worked out.
“We regard the draft manual as a starting point rather than a final position,” Reitz said.
“Luno is committed to engaging further with the Reserve Bank and national treasury to refine the framework, so that South Africa does not fall behind,” Reitz added.
Source: this article is based on reporting by TechCentral. Image: TechCentral. Written with the help of AI and published by the Tzaneen Voice Technology desk. See our Editorial Standards.
Werner Jacobs covers technology for Tzaneen Voice. Werner reports on mobile networks, data prices, internet access, smartphones, apps, AI, cybersecurity and South African tech companies. Each story explains what a new product, price change or policy means for ordinary users in South Africa.