South Africa Warns Crypto and Stablecoins Pose Systemic Risks Amid Regulatory Gaps

South Africa's central bank has flagged cryptocurrencies and stablecoins as emerging threats to financial stability, citing inadequate regulatory oversight. The warning comes as stablecoin trading volumes reached 80 billion rand ($4.3 billion) by October 2024, becoming the preferred on-ramp for digital asset transactions.

The Reserve Bank's Financial Stability Review reveals concerns about cross-border crypto flows bypassing exchange controls. "Without a complete framework, we lack sufficient oversight," said Herco Steyn, the bank's macroprudential specialist. New regulations targeting cross-border crypto transactions are under development through collaboration between monetary authorities and the National Treasury.

Market participants note the irony: the very features that make crypto attractive—borderless transactions and decentralized control—are now drawing regulatory scrutiny. Stablecoins have particularly attracted attention as they bridge traditional finance and digital asset ecosystems without centralized intermediaries.