South African Reserve Bank identifies stablecoins as new risk to financial system

The Reserve Bank of South Africa (RBZ) has identified stablecoins as a new risk to the financial system, as trading volumes surge to 80,000 billion rand, while currency regulation remains stagnant.

On November 25, 2025, at 10:04 AM, Bloomberg News reported that the South African Reserve Bank (SARB) warned that the lack of comprehensive regulations for digital assets and stablecoins is posing a significant new risk to the stability of the country's financial sector.

The SARB said in its semi-annual Financial Stability Review released on Tuesday that cryptocurrencies, being fully digital assets and borderless, could be used to circumvent South Africa's foreign exchange regulations, which it does not currently cover.

Herco Steyn, a macroeconomic and central bank risk management expert, stated that the risks posed by cryptocurrencies and stablecoins stem from the lack of a comprehensive and coordinated regulatory framework, which is not yet in place. He anticipates more progress in this area by 2569, but warns that the absence of such a framework means insufficient oversight.

South Africa's Reserve Bank and Treasury are working together to develop new rules to regulate cross-border crypto transactions and prepare to amend the Currency Control Act to cover digital assets.

South Africa has seen a rapid increase in the use of stablecoins since 2565. SARB states, “Previously, Bitcoin and other popular cryptocurrencies were the primary channels for trading digital assets, but recently, stablecoins pegged to the dollar have become the main trading pair on the country’s crypto platforms.”

The use of stablecoins, digital tokens backed by assets like US Treasury bonds, to maintain price stability has surged as a less volatile alternative to the crypto market.

The surge comes amid a new round of market volatility, with Bitcoin falling from a high of over $126,000 in early October to around $87,000, while Ether has tumbled around 40% from its August peak, while stablecoin trading volumes surged to almost 80,000 billion rand, or around $4.6 billion, by October from less than 4,000 billion rand in 2565, according to the SARB.

“As crypto adoption grows in South Africa, the need for a regulatory framework must evolve to keep pace with the increasing market structure and risks,” SARB stated.

South Africa's crypto industry is dominated by three main platforms : Luno, VALR, and Ovex, with nearly 7.8 million registered users as of July and total assets valued at 25.3 billion rand as of December 2024, according to SARB data.

Steyn added that, in the long term, new risks may arise from other technologies, such as artificial intelligence and quantum computing.

Reference: www.bloomberg.com

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