VALR co-founder and CEO Farzam Ehsani has warned that South Africa’s proposed cross-border cryptocurrency regulations could harm the domestic digital asset sector, stifle innovation, and push capital and activity offshore. He cautioned that overly restrictive measures may unintentionally reduce regulatory visibility by driving transactions into less transparent channels.
VALR CEO Warns of Unintended Consequences
Ehsani, who leads one of South Africa’s largest crypto exchanges, said elements of the draft cross-border framework risk undermining the country’s competitiveness in digital finance. According to his assessment, stringent curbs could deter local investment, limit product development, and encourage businesses and high-value clients to move operations or liquidity to jurisdictions with clearer or more enabling rules.
Corporate Limits and Illicit Flow Risks
A key concern centers on potential caps or restrictive conditions for corporate crypto transactions across borders. Ehsani argued that tight limits may not eliminate risk but instead shift activity to unregulated platforms or informal channels, complicating anti-money laundering and counter-terrorist financing oversight. He urged policymakers to calibrate rules to keep activity within the supervised financial system, where monitoring and enforcement are most effective.
Background: South Africa’s Evolving Crypto Rules
South Africa has been building a regulatory perimeter for digital assets in recent years. The Financial Sector Conduct Authority (FSCA) brought crypto asset service providers into the financial services licensing regime, while the South African Reserve Bank (SARB) and its Financial Surveillance Department oversee exchange control and cross-border flows. The latest proposals seek to formalize how crypto-related transactions are treated across borders within the country’s existing capital control framework.
Industry Calls for a Balanced Approach
Ehsani called for clear, risk-based rules that address illicit finance and consumer protection without driving compliant market participants away. Industry stakeholders have consistently advocated for proportional thresholds, standardized disclosures, and supervisory cooperation to maintain regulatory insight while supporting responsible growth.
What to Watch
- How SARB refines cross-border provisions following industry feedback.
- Alignment between exchange control rules and FSCA-licensed crypto service providers.
- Impacts on liquidity, pricing, and onshore crypto product offerings if stringent limits are adopted.
Policymakers face a familiar trade-off: crafting rules that mitigate abuse and systemic risk, while preserving the benefits of onshore participation and effective oversight. The industry is urging adjustments to ensure the final framework achieves both objectives.