South Africa's Currency Curbs Drain Wallets; Experts Call for Overhaul

South Africa’s exchange controls are extracting a steep price from ordinary citizens and businesses, according to Simon Dingle, co-founder of the rand stablecoin ZARP. Dingle argues the country should scrap capital restrictions entirely, saying decades of such controls have backfired on the very public they were meant to protect.

“Foreign exchange control has cost the South African economy billions, if not more, in lost investment and value being created outside of the country by entrepreneurs,” Dingle said. The damage runs deeper than any single statistic: fewer jobs, fewer startups, and fewer opportunities for people seeking to build careers in technology and innovation within South Africa’s borders.

The immediate public concern centres on a draft framework published jointly by the National Treasury and the South African Reserve Bank on 3 August. The Crypto Assets Manual for cross-border activities would prevent South African companies from moving cryptocurrency across borders at all. Only individuals would retain limited rights to transact offshore, using either a R2-million single discretionary allowance or a R10-million foreign capital allowance. The public comment period closes on 30 September.

The draft rules apply to provisions gazetted on 17 April that drew fierce criticism from industry. Under those Capital Flow Management Regulations, resident entities cannot engage in crypto transactions classified as importing or exporting capital. The manual cannot take effect until those regulations are formally promulgated.

Dingle’s position goes further than most formal industry submissions, which have sought narrower modifications rather than wholesale abolition. His core argument reflects a broader concern: that apartheid-era legislation designed to prevent capital flight is instead driving people and businesses away from South Africa altogether. The case of Mark Shuttleworth illustrates the pattern. Shuttleworth paid R250-million to the Reserve Bank in 2009 under a 10% exit charge when he moved about R2.5-billion offshore, spending years in legal battles over the levy. The constitutional court ultimately upheld the charge as a regulatory measure in June 2015, though the exit charge itself had been suspended in 2011.

The draft crypto rules contain provisions Dingle describes as particularly damaging to ordinary innovation. The treatment of self-custody wallets stands out as “not only misguided, but also unenforceable” and likely to “massively stifle innovation”. Under the draft, when someone transfers their own cryptocurrency from a domestic service provider to their own cold storage wallet, the transaction triggers cross-border capital control rules. In practical terms, a person moving their own coins to their own secure storage would be treated as having moved money out of the country.

That distinction matters enormously for everyday users. Dingle argues that reserve-backed rand stablecoins present a fundamentally different case. A stablecoin backed by rand reserves held in a South African bank account does not represent capital leaving the country, even when the token itself moves internationally. The value remains within South Africa’s financial system. Regulators, he says, should distinguish between tokens running on transparent public ledgers where value stays domestic and other crypto assets that represent genuine capital flight.

The broader debate reflects genuine disagreement about how distributed ledger technology should serve the public. Dingle favours decentralised finance models, arguing that “decentralised finance has to win if we care about transparency, financial inclusion, privacy, and reducing the harms caused by identity theft and other financial scams and crime”. He contrasts this with institutional consortium approaches like ZARU, which launched in February with backing from Sanlam, Luno, EasyEquities and Lesaka Technologies.

ZARP itself launched in 2021, having been founded by Dingle and Kenny Inggs two years earlier. The stablecoin operates through licensed financial services provider Inves Capital, with treasury management by Old Mutual Wealth. It runs across multiple blockchain networks including Ethereum, Polygon, Base, Solana and Gnosis Chain. As of this week, approximately R81.5-million in ZARP circulated in the market.

The public response to the draft rules has been “overwhelming”, Dingle said. Treasury and the Reserve Bank have acknowledged that comments on the April regulations were not yet incorporated into the August manual, citing timing and volume. Whether authorities will reconsider their approach before final legislation takes effect remains the question citizens and businesses are now waiting to have answered.