South Africa’s Reserve Bank Warns on Growing Risks from Stablecoins

TLDR

• South Africa’s Reserve Bank identified digital assets and stablecoins as a growing risk to financial stability.
• The number of crypto users in the country reached 7.8 million by July 2025, with $1.5 billion held in custody.
• Stablecoins have become the preferred trading pair in South Africa due to their lower volatility compared to other cryptocurrencies.
• The Reserve Bank expressed concerns about crypto assets circumventing the country’s Exchange Control Regulations.
• South Africa lacks a comprehensive regulatory framework for stablecoins, leaving the country exposed to potential risks.

The South African Reserve Bank raised concerns about the growing risk posed by digital assets and stablecoins in its second financial stability report for 2025. The number of crypto users in the country has surged, with 7.8 million users on the three most significant crypto exchanges as of July. In the report, the central bank expressed its concern about the potential impact on the country’s financial stability as digital asset use continues to grow.

South Africa’s Crypto Landscape Grows

As of July 2025, South Africa’s three largest crypto exchanges reported a combined 7.8 million users. At the end of 2024, crypto exchanges held approximately $1.5 billion in custody. The increasing popularity of crypto assets has raised alarms at the South African Reserve Bank, which noted that their borderless nature could undermine the country’s regulatory framework.

The report highlighted the risks posed by crypto assets, such as Bitcoin and Ether, to the financial system. The Reserve Bank warned that digital assets could be used to bypass Exchange Control Regulations. These regulations are designed to control the movement of funds in and out of South Africa.

Stablecoins Rise as Preferred Trading Pair

The Reserve Bank also observed a shift in preference toward stablecoins over traditional cryptocurrencies such as Bitcoin. USD-pegged stablecoins have become the favored trading pair on South African platforms since 2022. This change is attributed to stablecoins’ lower price volatility compared to other cryptocurrencies.

In its report, the central bank noted that the adoption of stablecoins has skyrocketed. The shift is attributed to the growing demand for a more stable digital asset for trading. The use of stablecoins has now become a prominent feature of the South African crypto market.

The Financial Stability Board highlighted South Africa’s lack of a framework for regulating global stablecoins. According to the report, the country has only partial regulations for cryptocurrencies. This regulatory gap may leave South Africa exposed to the risks associated with digital assets.

The Reserve Bank’s warning mirrors its concerns from 2017, when it deemed issuing digital currencies too risky. However, recent steps taken by South Africa’s Financial Sector Conduct Authority suggest a more positive outlook. The authority has since designated cryptocurrencies as financial products and issued licenses to crypto companies.

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