South Africa plans exchange-control overhaul

South Africa has proposed a major overhaul of its decades-old exchange-control framework as it seeks to strengthen its role as a financial hub for Africa and attract more investment. The finance ministry’s draft changes would raise discretionary offshore allowances for individuals, ease capital-flow restrictions and bring crypto assets formally into the regulatory system.

The Johannesburg Stock Exchange estimates the reforms could attract at least 10 trillion rand, or 608 billion dollars, in investment over time. National Treasury published the draft circular for public comment on April 17.

Much of the legislation under review dates back to 1961, with some provisions originating in 1933, according to Vukile Davidson, deputy director-general of financial policy at National Treasury. He said the old system was built to handle a broad range of issues beyond capital flows, including illicit flows and financial stability.

The proposed changes would for the first time allow asset managers to run non-rand funds from South Africa, even if they raise, deploy and report in foreign currencies. Under current rules, those funds must be domiciled offshore, a requirement officials and market participants say has pushed business, jobs and expertise toward rival hubs such as Mauritius, Kenya, Kigali and Dubai.

The overhaul would also bring crypto assets into the exchange-control framework as a regulated form of capital. Crypto trading above a set threshold would be allowed only through regulated intermediaries, with mandatory disclosure of holdings and large transactions to National Treasury. South Africa’s high crypto adoption has made digital assets an important tool for trading, remittances and cross-border transfers outside the traditional banking system

‍







‍