Crypto Africa: Luno challenges stablecoin treatment
The debate began earlier this summer. BrefCrypto previously detailed the South African restrictions that could push some crypto flows offshore. Luno is now going further by challenging the logic used to classify transactions.
According to its submission, filed before the public consultation closed on September 30, the proposal places Bitcoin, stablecoins and utility tokens in the same category for cross-border flows. The South African Reserve Bank (SARB) itself acknowledges that its current approach does not yet distinguish between different types of crypto-assets.
For Luno, that is precisely the problem.
A South African company that settles an international invoice in bank dollars is normally making a payment linked to the purchase of goods or services. If it uses a stablecoin to settle exactly the same invoice, Luno argues that the proposal could instead classify the transaction as a capital movement.
Stablecoins have already gained significant traction in the country. BrefCrypto recently reported that nearly 27 billion rand worth of USDT had circulated across three major South African platforms over one year.
The issue is therefore no longer theoretical.
The IMF makes the issue more complex
Luno’s argument is based on Article VIII of the IMF’s Articles of Agreement. South Africa has accepted the obligations set out in sections 2, 3 and 4, among others. The IMF’s latest report on the country states that it maintains a system free of restrictions on payments and transfers related to current international transactions.
Article VIII notably provides that a member state must not, without IMF approval, impose restrictions on payments and transfers relating to current international transactions.
That is why the distinction between a current payment and a capital movement matters.
Luno’s question is essentially this: why should an invoice become a capital movement solely because it is settled in USDC or USDT rather than traditional dollars?
That does not, however, automatically mean that Pretoria would be breaching its obligations to the IMF. The Fund’s case law and guidance provide an important qualification: requiring a payment to pass through a particular channel does not necessarily constitute a restriction under Article VIII. The practical question is whether the regulation limits the availability or use of foreign currency to make the payment.
Luno is therefore raising a question of legal compatibility, not pointing to an established violation.
Businesses remain the proposal’s weak point
The second issue directly concerns South African companies.
The SARB’s official draft Crypto Assets Manual provides that, at this stage, only individuals may transfer crypto-assets offshore through authorised service providers using their permitted foreign-exchange allowances. The SARB also states that a transfer from a local CASP to a foreign exchange or a non-custodial wallet may trigger cross-border treatment.
Luno argues that companies would then have no general threshold, comparable exception or ordinary procedure allowing them to carry out these transactions. Market makers would be particularly affected. Without them, the gap between South African and international prices could widen and local liquidity could decline.
The contradiction becomes more apparent as African companies begin using stablecoins for payments. BrefCrypto recently showed how DCS Pay and Kotani Pay aim to convert USDT and USDC into local currencies across six African markets.
Pretoria has not made a final decision. The Treasury and the SARB themselves say the manual remains subject to change after the contributions received are reviewed. Their objective remains legitimate: preventing crypto-assets from becoming a means of bypassing foreign-exchange controls and concealing capital outflows.
Nevertheless, Luno’s criticism highlights a distinction that the final version will find difficult to avoid. Bitcoin held as an investment, USDT used to pay an invoice and a utility token granting access to a service do not serve the same economic purpose.
Regulating them in exactly the same way makes oversight simpler. It could also turn an ordinary commercial payment into a capital movement simply because a blockchain sits in the middle.
