Crypto Curbs Would Undermine Oversight, VALR CEO Warns

South Africa's proposed cross-border crypto rules would drive the domestic industry into channels beyond any regulator's view, said Farzam Ehsani, co-founder and chief executive of VALR.

The joint draft manual from the National Treasury and the South African Reserve Bank tries to fit a half-century-old capital-control framework onto digital assets, Ehsani told Bitcoin.com News. The result, he said, is a set of provisions that harms licensed local operators while pushing business and users toward unregulated foreign exchanges.

“By prohibiting legitimate corporate activity through regulated providers, the proposed framework is likely to drive transactions underground or offshore,” Ehsani said. “This would reduce the very visibility and surveillance that National Treasury and the SARB seek to achieve, while undermining employment, tax revenue, investment, innovation and business formation.”

Ehsani pointed to specific problems in the draft. Corporate entities are barred from conducting cross-border crypto transactions under the proposed rules. Inbound transfers from private self-custody wallets are classified as non-permissible for local crypto-asset service providers.

The stablecoin example makes the tension clear. Cross-border stablecoin payments settle faster and cheaper than legacy banking networks. Shutting them down removes a legitimate use case without reducing demand, Ehsani argued.

“If South Africa chooses to retain capital controls, it should at least apply them on a principled, fair and technology-neutral basis,” he said. “Regulation should govern the movement of value and manage the associated risks; it should not dictate which technologies individuals and businesses can use.”

For individual residents, the draft permits crypto transfers offshore within existing foreign-currency allowances. Ehsani described that as an improvement: a reportable event now triggers when funds leave a CASP rather than at the initial purchase. The corporate ban and self-custody-wallet restrictions, however, create “perverse incentives” for retail users as well, he said.

The VALR CEO's comments come nearly a month after Luno, another South African exchange, formally challenged the proposed rules. Luno has urged parliament to rewrite the framework, arguing the government's approach will push crypto activity beyond domestic regulators and tax authorities.

The National Treasury and the SARB opened the draft for public comment through Sept. 30. Officials said the guidelines remain subject to refinement after stakeholder engagement.

Ehsani said the consultation process could still produce a more balanced outcome.

“We face a fundamental choice in South Africa,” he said. “Whether we are serious about overcoming our economic challenges, unlocking growth and becoming a globally competitive force, or whether our frameworks undermine those ambitions.”

The alternative, he argued, would be abolishing exchange controls entirely while preserving reporting, transparency and regulatory surveillance.

“South Africa would be better served by abolishing exchange controls altogether while preserving appropriate reporting, transparency and regulatory surveillance, rather than attempting to retrofit a half-century-old regulatory regime onto modern technology and the digital economy,” Ehsani said.