South Africa’s crypto ascent: balancing risk and regulation for continental leadership

South Africa is quickly becoming a central figure in the African cryptocurrency landscape. Projections from Statista suggest the nation’s crypto market will generate $615.5 million in revenue this year, with further growth expected to $637.9 million by 2026.

Many other countries have seen a surge in cryptocurrency use due to economic uncertainty, but South Africa has taken a different approach. They have focused on creating clear rules, developing strong technology, and adding digital assets to their financial system in a planned way.

Widespread adoption

Cryptocurrencies have already found their way into the wallets of approximately 10% of South Africans, translating to about six million individuals. Most people are very aware of digital assets. 98% of adults have heard of them.

The typical South African crypto user is between 18 and 44 years old, possesses a higher education, and earns a middle-class income. The driving forces behind their interest include using crypto as a hedge against inflation, gaining access to global financial opportunities, and believing in the long-term potential of blockchain technology as the future of money.

Beyond speculation

Stablecoins, cryptocurrencies designed to maintain a stable value, are increasingly favored over Bitcoin for everyday transactions like saving money and sending funds across borders. Chainalysis data reveals that stablecoins account for 43% of all cryptocurrency trading volume in sub-Saharan Africa.

South Africans are using these stablecoins as a digital equivalent to the U.S. dollar, seeking to protect themselves from the volatility of the local currency, the Rand. Several companies, including OVEX and SentiPay, have even launched stablecoins like ZARP and ZARC, which are directly pegged to the South African Rand.

Regulatory framework fuels growth

A turning point arrived in 2022 when South African authorities officially recognized cryptocurrencies as financial products. This decision brought the crypto market under the watchful eye of the Financial Sector Conduct Authority (FSCA), the country’s financial regulator.

By mid-2024, the FSCA had granted licenses to 138 Crypto Asset Service Providers (CASPs). A key condition for these licensed businesses is registration with the Financial Intelligence Centre to ensure compliance with Anti-Money Laundering (AML) regulations.

Since April 2025, South Africa has also enforced the “Travel Rule,” requiring CASPs to collect detailed information about both the sender and recipient for any crypto transaction exceeding 5,000 Rand (approximately $280 USD). This step aligns South Africa with global standards set by the Financial Action Task Force (FATF).

This regulatory clarity has not gone unnoticed by traditional financial institutions. Absa Bank has publicly expressed interest in utilizing stablecoins for cross-border payments, and the VALR exchange is already serving corporate and institutional clients.

Regulation as collaboration

South Africa’s success in integrating cryptocurrencies into its economy stems from a combination of factors: a well-developed infrastructure and a proactive regulatory stance that views the crypto industry as a partner rather than a threat. This environment encourages natural growth, moving beyond a scenario where digital assets are merely a last resort in times of crisis. Ray Youssef, head of the P2P platform NoOnes, shared this perspective with ForkLog.

Youssef believes that South Africa distinguishes itself from other developing nations by empowering its citizens, particularly its youth, through cryptocurrency adoption.

South Africa’s advanced financial infrastructure, high smartphone penetration rates, and widespread internet access give it a distinct advantage over many other African countries. However, the FSCA’s approach has been the defining factor.

Youssef emphasized that the FSCA’s commitment goes beyond surface-level actions. The agency recognizes that cryptocurrency is an integral part of the future financial landscape and has formally incorporated digital assets into the existing legal framework. This provides greater consumer protection and boosts confidence among everyday South Africans.

He further noted that the market’s maturity is reflected in the diverse applications of cryptocurrencies, which extend beyond hedging against inflation or devaluation to include business ventures, freelance work, and exploring emerging technologies.

South Africa’s CASP licensing model has the potential to serve as a blueprint for other nations in the region, as it promotes transparency and eliminates questionable operators. However, there is a risk that overly strict regulations could stifle smaller companies and entrepreneurs.

Youssef cautioned against creating regulations that solely benefit large corporations, banks, and venture capital-backed exchanges. He warned that if local entrepreneurs attempting to create wallets or P2P marketplaces are squeezed out, the entire system could simply become a blockchain-based replica of a flawed, outdated system.

According to FSCA data from late 2024, 248 out of 420 CASP license applications were approved. Youssef suggests that this stringent filtering process might discourage innovation and impede the overall growth of the crypto ecosystem.

The stablecoin market is currently dominated by USDT and USDC due to their high liquidity and established network effects. Users often choose them by default for cross-border transfers and maintaining value. While stablecoins pegged to the Rand have potential, experts believe their primary use case will be domestic, such as for salary payments or retail transactions.

Youssef questioned why someone in Nigeria or Kenya would want to take on the risks associated with the Rand. However, he also pointed out that for the domestic market, a stablecoin pegged to the national currency offers a stable digital alternative that isn’t reliant on the U.S. dollar. This can be a powerful tool.

Youssef stressed that local projects need to achieve deep liquidity, build trust, and provide real-world utility to compete with established global players. While the emergence of these stablecoins is a significant step, displacing dollar-denominated assets in Africa will be a formidable challenge.

Ghana: charting a regulatory course

The Central Bank of Ghana is on track to finalize a comprehensive regulatory framework for crypto platforms and present it to parliament by September 2025. Project proponents believe this marks a major step toward the mainstream adoption of digital assets.

Central Bank Governor Johnson Asiama stated that the proposed legislation will enable the country to license companies, stimulate cross-border trade, attract strategic investments, and gather essential financial data.

This initiative responds to the widespread adoption of cryptocurrencies among Ghana’s 33 million citizens, with approximately 3 million already using digital currencies, according to Bloomberg.

From July 2023 to June 2024, cryptocurrency transactions in Ghana totaled $3 billion, indicating significant economic activity taking place outside of traditional banking channels. Authorities acknowledged that they were slow to react, as many economic actors had already begun using cryptocurrencies for transactions outside of regulatory oversight.

Nigeria: leading through legislation

Nigeria has already established a comprehensive regulatory framework for digital assets and stablecoins through the Investments and Securities Act of 2025, positioning itself as a leader in Africa’s crypto ecosystem.

The country’s Securities and Exchange Commission (SEC) now classifies virtual assets, cryptocurrencies, and tokens as securities, granting it clear authority to regulate the sector. SEC head Emomotimi Agama emphasized a focus on “responsible innovation” to ensure market stability and protect consumers.

The new regulations require stablecoin issuers to maintain verifiable reserves, undergo regular audits, and comply with AML and KYC protocols. Foreign Virtual Asset Service Providers (VASPs) are required to establish reciprocal recognition agreements with their home-country regulators.

This policy shift represents a departure from previous enforcement actions, such as the lawsuit against Binance, toward a strategy of integrating digital assets into the country’s financial system.

In the past, Nigerian authorities blamed Binance for the instability of the local currency and, in 2024, detained two of its top executives: Nadeem Anjarwalla, Binance’s director for West and East Africa, and Tigran Gambaryan, Vice President of Global Intelligence and Investigations. Gambaryan was held for eight months at the Kuje Correctional Center in Abuja before the charges against him were dropped.

Under the new strategy, the SEC has granted preliminary approvals to local firms Busha Digital Limited and Quidax Technologies Limited to operate within the regulatory framework.