Bitcoin is South Africa’s most preferred crypto asset — SARB report

South Africa’s apex bank, the South African Reserve Bank (SARB), has published its second Financial Stability Review report.

• In it, the bank outlined emerging trends as they relate to cryptocurrencies and their usage within South African borders.  
• South Africa remains the most advanced African market in digital asset regulation, but regulators say more work is needed to achieve full oversight. The government is now focused on tightening and improving its crypto rules. 

Here are a few takeaways from the report.

Adoption isn’t slowing down 

SARB published data on how its citizens are interacting with the top crypto exchanges in the country and the assets they hold. The bank estimated that by the end of July, the top three licensed exchanges — Luno, Ovex and VALR — had nearly 7.8 million registered users.

SARB reported the total value of assets custodied by these three exchanges at the end of last year as R25.3 billion (approximately $1.5 billion), a marked increase from R10 billion ($584 million) at the start of 2023. 

Context: Previously, assessing the exact numbers behind crypto usage in the country may not have been as straightforward. 

• Exchanges often choose not to share their traction in response to journalistic enquiries due to unclear regulations. 
• With the advent of clear guidelines, exchanges are now required to share their numbers with regulators. 

Bitcoin is the most preferred custodial asset 

According to SARB’s findings from December 2024, bitcoin was the crypto asset of choice, accounting for the largest share of domestic crypto holdings valued at more than R13 billion ($759 million). 

• Ripple (XRP), the native token of the Ripple blockchain, came in a distant second, with more than R4 billion ($234 million) in XRP held by these exchanges. 
• Ether, Solana and the stablecoins USDT and USDC followed closely behind. 

However, stablecoins are becoming increasingly popular among traders, reflecting growing interest in fiat-pegged digital assets.

• Since 2022, trading volumes for U.S. dollar–pegged stablecoins have surged from under R4 billion ($234 million) to nearly R80 billion ($4.7 billion) this year.
• For the third year in a row, USDT/ZAR was by far the most traded pair on the exchanges reviewed by SARB.

Local stablecoins pegged to the South African rand saw significant activity in 2022, climbing as high as R250 million in monthly onchain transaction value.

• The hype around these rand-pegged stablecoins has since died down, but a resurgence may be on the horizon as the numbers start to pick up again, especially in the face of newly launched ZAR stablecoins. 
• SARB attributed the increased adoption to the relative stability of these fiat-pegged digital assets, despite the bank’s governor’s claims just weeks ago, calling into question the supposed stability and backing of stablecoins. 

Increased adoption brings inherent risks 

The Reserve Bank warned that rising crypto adoption poses risks to South Africa’s financial system, especially because crypto’s borderless nature allows funds to move across borders outside its oversight.

• According to the bank, cryptocurrencies may have been used to circumvent exchange controls.
• SARB found that the top ten bitcoin wallets in the country have sent R63 billion abroad since 2019, a figure it expects to rise even further if other popular cryptocurrencies such as ETH and XRP are included.

In addition: The use of crypto for payments and settlements can potentially derail financial stability, SARB noted. 

• It added that a lack of reliable data on these uses and other regulatory gaps — a lack of dedicated stablecoin laws, for example — can blind the bank to flagging these risks. 
• To plug these gaps, the bank is working with the South African National Treasury to draft new regulations and amend existing exchange control laws to oversee cross-border crypto usage.