FINANCE FORUM • issued by central banks for payments and financial inclusion, making them a direct liability of the government.
While unbacked crypto assets like Bitcoin and Ethereum effectively serve as a store of value and medium of exchange, their volatility precludes them from acting as a unit of account.
In contrast, stablecoins effectively address this issue as their value is pegged to an external reference asset. This creates opportunities for businesses to transact using stablecoins, with massive potential benefits for cross-border trade.
In 2022, Forvis Mazars in South Africa piloted an initiative in conjunction with the Asia Pacific region to investigate the feasibility of accepting stablecoins as payment from an accounting, cash flow and risk perspective.
The system enabled cross-border payments in a fiat-backed stablecoin between the Asian and local entities. The transaction cleared within four hours, with the ZAR reflected in the local bank account on the same day. If traditional banking rails were utilised, it could have taken up to a week to complete the transaction.
Given the speed and efficiency of the transaction, it is clear to see why the value of stablecoin transactions rose every quarter in 2024 to exceed the global volumes processed by Visa and Mastercard.
The surge in adoption and usage over the last 12 months has thrust stablecoins into the mainstream global financial services sector, which is prompting governments, including South Africa’ s, to explore the potential use cases and challenges that may arise.
The ability to facilitate faster and cheaper cross-border remittance is particularly beneficial for a country that engages in international trade and runs such a large trade deficit.
Using stablecoins can drastically reduce the costs associated with paying for goods and services internationally, while the large migrant workforce can also send money back to their families at a lower cost.
There are also numerous tech businesses that want to invest in South Africa utilising cryptocurrencies as a means of capital.
However, digital assets do not currently meet exchange control regulations, as they are not recognised as a standard form of currency and, therefore, foreign inflows and cannot be placed on record with the SARB for subsequent repayment. The need to use legacy banking rails, as opposed to cryptocurrencies, to invest in local companies is limiting potential direct foreign investment into South Africa.
Furthermore, giving local businesses the ability to transact using stablecoins and leveraging of the advantages it offers, could boost exports to support cross-border trade, which would also facilitate more foreign inflows into South Africa to boost GDP and grow the economy.
However, before that can happen, the country needs a regulated environment that is integrated into various facets from a practical standpoint to ensure that these processes are amended to allow and support the use of stablecoins.
For instance, legacy mechanisms already make exporting goods complex and cumbersome. This process requires a SAD500 customs declaration form and a Unique Consignment Reference( UCR) code to clear SARS Customs. The issue is that exporters cannot currently include cryptocurrency or stablecoins as a medium of exchange in these forms.
In addition, as a decentralised medium of exchange with transactions processed over the blockchain, there is no third-party provider that can issue a document to provide proof of payment. Without this authentication, exporters currently cannot accept stablecoins for goods, despite the efficiencies.
The same issue would arise should SARS request supporting documentation to verify VAT submissions on zero-rated exports. In these instances, exporters would only have the flow of on-chain movements to prove the transaction occurred, which is currently not an accepted form of validation.
To boost adoption and usage, the IFWG would need to provide greater clarity on what these regulatory frameworks would look like, but it is unclear whether the working paper due for release later this year will cover these issues.
It is critical that the government expedite these matters and deliver firm resolutions. There are many countries that have formalised these regulations, which means South Africa is already a laggard in cryptocurrency-based fintech innovation.
The opportunity cost is massive and continues to grow. For instance, if South Africa had taken a first-mover approach to establish a strategic bitcoin reserve in 2020, it may not have required VAT increases to cover the budget shortfall.
Similarly, if Eskom had used periods where it had surplus power to mine bitcoin, it would not carry the debt burden it does today.
South Africa needs an attitude shift that embraces the potential that cryptocurrencies and stablecoins offer, in addition to greater urgency in developing and enacting enabling regulations. Time will tell whether the IFWG can address the elephant in the room. •
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. www. africanmining. co. za African Mining Publication African Mining African Mining • June 2025 • 31