Key Takeaways
- • Luno formally submitted recommendations to the South African Reserve Bank (Sarb) opposing the draft Crypto Asset Manual, arguing the current rules could drive crypto businesses and investment offshore and increase consumer costs.
- • The proposed framework imposes a blanket ban on all South African companies moving crypto across borders in either direction, which Luno contends will push activity into unregulated channels and undermine the Sarb and Treasury's stated goals of financial sector modernization.
- • Luno acknowledges that the draft manual correctly treats buying and holding crypto on locally licensed platforms as domestic activity, but argues targeted modifications are needed to align the framework with global best practices while maintaining consumer protection and oversight of higher-risk flows.
- • Marius Reitz, Luno's general manager for Africa, warned that poorly calibrated rules risk leaving South Africa "irrelevant in a modern and fast-evolving global financial system" and jeopardizing jobs and investment, while properly designed rules could support innovation and economic growth.
Summary
Luno, a major crypto platform operating in South Africa, has escalated concerns about the South African Reserve Bank's draft Crypto Asset Manual through a formal submission to regulators. The company warns that the current framework could produce the opposite of its intended effects—driving legitimate crypto businesses offshore, raising costs for consumers, and pushing activity into unregulated channels that regulators cannot monitor.
The draft manual contains provisions that Luno views as misaligned with the Sarb and Treasury's stated objective of building a modern, thriving financial sector. Most significantly, the framework imposes a blanket prohibition on all South African companies from conducting any cross-border crypto transfers, regardless of direction or purpose. Luno argues this blanket restriction will be counterproductive, potentially encouraging both businesses and investors to relocate operations to jurisdictions with more balanced regulatory approaches.
In its submission, Luno acknowledged that the draft manual correctly identifies a key distinction: buying and holding crypto on locally licensed platforms should be treated as a domestic activity subject to standard regulatory oversight. However, the company contends that the cross-border transfer ban requires substantial revision. Luno's general manager for Africa, Marius Reitz, emphasized that the stakes extend beyond the crypto sector itself. "Get this right, and South Africa keeps investment and jobs. Get it wrong, and South Africa's economy will simply not be ready for the future," Reitz stated, signaling that regulatory missteps could have broader economic consequences as global financial systems continue to evolve.
Luno's position reflects a broader tension in crypto regulation: the need to combat illicit flows and manage financial stability risks while preserving the jurisdictional attractiveness required to foster legitimate innovation and business activity. The company has proposed targeted changes rather than rejection of the framework, framing its submission as a collaborative effort to help regulators achieve oversight goals without inadvertently creating uncompetitive conditions that push activity underground or abroad.
The draft manual contains provisions that Luno views as misaligned with the Sarb and Treasury's stated objective of building a modern, thriving financial sector. Most significantly, the framework imposes a blanket prohibition on all South African companies from conducting any cross-border crypto transfers, regardless of direction or purpose. Luno argues this blanket restriction will be counterproductive, potentially encouraging both businesses and investors to relocate operations to jurisdictions with more balanced regulatory approaches.
In its submission, Luno acknowledged that the draft manual correctly identifies a key distinction: buying and holding crypto on locally licensed platforms should be treated as a domestic activity subject to standard regulatory oversight. However, the company contends that the cross-border transfer ban requires substantial revision. Luno's general manager for Africa, Marius Reitz, emphasized that the stakes extend beyond the crypto sector itself. "Get this right, and South Africa keeps investment and jobs. Get it wrong, and South Africa's economy will simply not be ready for the future," Reitz stated, signaling that regulatory missteps could have broader economic consequences as global financial systems continue to evolve.
Luno's position reflects a broader tension in crypto regulation: the need to combat illicit flows and manage financial stability risks while preserving the jurisdictional attractiveness required to foster legitimate innovation and business activity. The company has proposed targeted changes rather than rejection of the framework, framing its submission as a collaborative effort to help regulators achieve oversight goals without inadvertently creating uncompetitive conditions that push activity underground or abroad.
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