South Africa’s Central Bank Flags Crypto and Stablecoins as Growing Financial Stability Threat

Highlights:

• South Africa sees fast growth in stablecoin trading as millions shift from volatile crypto assets toward lower-risk options.
• South Africa’s Central Bank flags stablecoins as a major market trend as trading volumes rise and local exchanges report strong user activity.
• Global regulators warn that stablecoins may drain liquidity from banks and increase pressure during periods of market stress.

The South African Reserve Bank has cast new uncertainty on crypto activity in its published second financial stability report of 2025. The bank pointed out the phenomenal increase in digital assets in the country and cautioned that the trend could put strain on the financial system of South Africa. It pointed to the expanding number of users and the growing value held across local trading platforms. It added that the borderless nature of digital assets creates new challenges for regulators.

The report showed that combined users on the three largest exchanges reached 7.8 million by July. These platforms held almost $1.5 billion in custody at the end of last year. The bank stated that crypto assets now influence trading habits across the market and continue to attract more participants. It said that this growth creates a new layer of risk because crypto can move across borders without restrictions. The bank also noted that traders have shifted from volatile coins to more stable instruments.

Data from the report showed that Bitcoin, XRP, Ethereum, and Solana once dominated trading pairs on local platforms. That pattern changed in 2022 when stablecoin volumes started to accelerate. The bank said that the shift reflects a preference for lower volatility and faster trade execution. It warned that the change may expose the system to risks that remain unclear without formal oversight.

South Africa’s Central Bank Flags Stablecoins as Volumes Surge Across Local Exchanges

The bank emphasized that the most prominent trend in the local crypto market is stablecoins. It stated that the amount of stablecoin traded increased by nearly 80 billion rand by October, compared to less than 4 billion rand three years ago. This dramatic increase indicates a new stage of crypto adoption. It also indicates a structural shift requiring better control and new regulations.

Herco Steyn, the bank’s lead macroprudential specialist, explained that crypto moves faster than current regulations. He said that South Africa’s exchange control rules operate on decades-old principles. He added that these rules do not match the speed or reach of modern digital assets. Herco Steyn warned that the system now faces a clear oversight gap. He said that regulators need a full framework to address the fast growth of crypto.

Local exchanges also show this shift in real numbers. Platforms like Luno, VALR, and Ovex now serve 7.8 million registered users. They collectively hold more than 25.3 billion rand in assets. This scale strengthens the call for better rules on cross-border flows. The bank and the National Treasury are now working on new measures that will close these gaps. These rules aim to bring crypto under tighter exchange-control regulation and prevent offshore movement of capital.

Global Regulators Mirror Concerns Over Stablecoin Market Influence

Other international watchdogs raised similar concerns. The European Central Bank issued new warnings about the impact of stablecoins on traditional banking. It said that stablecoins may pull deposits away from lenders and redirect liquidity toward instruments backed by United States Treasuries. It also said that this shift may increase pressure on banks during volatile periods.

The global trend of stablecoins is now emerging in South Africa. Regulators in key markets are seeking to influence new forms of digital asset standards. The local review is a sign of the same direction since South Africa is in the process of establishing new oversight.

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