• FINANCE FORUM
TREASURY MUST ADDRESS THE DIGITAL ASSET ELEPHANT IN THE ROOM
By Wiehann Olivier, a partner and FinTech & Digital Assets lead for Forvis Mazars
When Finance Minister Enoch Godongwana presented his delayed budget speech on 12 March amid the furore over a proposed VAT hike, blockchain-based digital assets were the elephant in the room.
Despite the Intergovernmental Fintech Working Group( IFWG) publishing a position paper on regulating crypto assets in June 2021, little further tangible progress has been made since then, at a time when other countries are forging ahead with new regulations on blockchain-based digital assets as they realise the potential benefits and positive impact digital assets could have on economic growth and GDP.
While the Financial Sector Conduct Authority( FSCA) incorporated the crypto asset service provider( CASP) licensing regime under the Financial Advisory and Intermediary Services( FAIS) Act in 2023 to grant players Financial Service Provider( FSP) licenses, no other material developments have emerged from the IFWG.
However, South Africa’ s grey-listing by the Financial Action Task Force( FATF) in February 2023 impacted the existing framework, with the compliance burden now falling on providers to align with FATF on travel, know your customer( KYC) and anti-money laundering( AML) regulations.
The failure of the government to integrate the digital asset sector into the formal financial services space and broader economy also represents a missed opportunity to shore up falling tax revenues and reduce the widening budget deficit.
Realising meaningful impact in terms of integrating digital technologies across diverse industries necessitates support from a digital economy, which involves the digitisation of tangible entities, such as ownership, identity, data and currency – all facilitated by blockchain technology.
With the proper regulations, the burgeoning digital economy can breathe new life into South Africa’ s ailing economy. While the crypto asset ship has not sailed just yet, the government needs to act sooner rather than later to unlock value from the sector.
With cryptocurrencies not deemed currency, they are currently not included in exchange control regulations, but the industry needs guidance and the certainty that regulators provide to drive investment and innovation.
As such, the industry desperately needs more active engagement and tangible efforts from the IFWG to support the
Supplied by Forvis Mazars
Wiehann Olivier, a partner and FinTech & Digital Assets lead for Forvis Mazars.
adoption and expansion of the utilisation of the asset class with regulations that strike the right balance between stakeholder safety and stability without stifling industry innovation.
Instead, the IFWG has seemingly expanded its scope to stablecoins as detailed in the 2025 budget review tabled. The group recently finalised a diagnostic of the domestic stablecoin landscape, which it plans to publish later in 2025, and continues its analytical work to understand the applicable use cases of stablecoins and recommend an appropriate policy and regulatory response.
While this differs from the work it did in 2021 in relation to cryptocurrencies, it is a welcome development for multiple reasons.
While stablecoins are technically a type of cryptocurrency, the difference is that they are pegged to a reserve asset, such as a central bank-backed fiat currency, to maintain a stable value. For example, Tether and Circle are US-domiciled stablecoins, with a market capitalisation of more than USD200-billion, issued by private companies that are backed by the US dollar.
Pexels | Karolina Grabowska
Stagnation in the IFWG on critical areas such as exchange control regulations, authoritative guidance on the various tax implications and various other aspects, like the tokenisation of traditional assets, is delaying the mass adoption of various crypto initiatives, including payments.
Stablecoins are also different from central bank digital currencies( CBDCs). While both aim to provide digital alternatives to traditional money, stablecoins are decentralised non-native tokens issued by smart contracts and used for crypto transactions, remittances and decentralised finance, whereas CBDCs are official digital currencies
30 • African Mining • June 2025 www. africanmining. co. za