South Africa: Stablecoins Emerge as Key in Payments, Finance

• Stablecoins have surpassed Bitcoin speculation as the primary driver of crypto activity in South Africa, indicating a shift towards practical utility.
• Absa, a major financial institution, is actively involved in the stablecoin market, both developing its own and holding reserves for third-party stablecoins like ZARsc.
• Proposed South African Reserve Bank exchange control rules for crypto assets pose a significant challenge, potentially hindering the operational viability of stablecoins and the emerging machine economy.
• Experts warn that stringent regulations could isolate South Africa from global digital economic advancements, particularly in AI-driven transactions.
• Beyond stablecoins, the tokenisation of real-world assets is gaining traction, promising wider investment access and faster settlement times.

Proposed South African Reserve Bank exchange control rules for crypto assets pose a significant challenge, potentially hindering the operational viability of stablecoins and the emerging machine economy.

Stablecoins are rapidly emerging as the dominant force in South Africa's crypto landscape, eclipsing the speculative trading that once characterized Bitcoin activity. This significant shift towards utility-driven digital assets was a central discussion point at the Moneyweb 2026 Money Summit, held at the Sandton Convention Centre, featuring insights from Rob Downes, head of digital assets at Absa Corporate and Investment Banking, and Carel de Jager, CEO of blockchain analytics firm Sixpence.

Unlike volatile cryptocurrencies, stablecoins are designed to maintain a stable value by tracking an underlying currency, such as the South African rand or the US dollar. Their primary function is not price appreciation but rather to facilitate the swift and cost-effective movement of value. Absa's operations across 10 African markets have seen stablecoin flows more than double over the past four years, now exceeding $500 billion and constituting the majority of crypto transaction volumes. Financial institutions like Absa are observing their clients increasingly leverage stablecoins for foreign exchange flows and trade finance, indicating a strong demand for these digital instruments.

Absa has developed its own bank-backed stablecoin, although it is not yet actively traded. The bank also plays a crucial role in the broader stablecoin ecosystem by holding the rand reserves that back ZARsc, a stablecoin issued by Super Money SA, a subsidiary of the New York-listed Super Group, which also owns the Betway gambling platform. There are several million rands worth of ZARsc tokens in circulation, each backed by an equivalent amount held in segregated accounts at Absa, with independent verification of these reserves. This backing is vital, as most stablecoins are issued by private companies rather than commercial or central banks, placing the redemption risk on consumers if issuers lack sufficient reserves.

Analysis from Sixpence corroborates this trend, showing a sharp decline in Bitcoin-related activity among South Africans to a mere fraction of the levels observed between 2019 and 2020. Despite this, total crypto transaction volumes have remained broadly consistent, with stablecoins filling the void left by Bitcoin's reduced speculative interest. This data underscores a fundamental evolution in crypto usage, moving beyond speculation towards practical applications such as payments, remittances, and cross-border transfers, highlighting the inherent utility of stablecoins due to their lack of volatility.

Despite the growing adoption and utility of stablecoins, their full potential in South Africa faces significant challenges from proposed regulatory frameworks. The South African Reserve Bank's (SARB) proposed exchange control rules for crypto assets are a particular concern, as they could constrain the intended business-to-business use cases for Absa's own bank-backed stablecoin. These regulations are viewed by some industry experts as potentially stifling innovation and hindering the country's participation in the evolving digital economy.

Carel de Jager of Sixpence has voiced strong criticism regarding proposed regulations that would classify the transfer of crypto assets from a private wallet to an exchange as a cross-border transaction. He argues that such an approach imposes traditional exchange control requirements on transactions that are inherently different, creating unnecessary friction. This regulatory stance is particularly problematic given the anticipated rise of the 'machine economy,' where artificial intelligence agents are expected to increasingly conduct independent transactions online, relying on stablecoins for their accessibility and 24/7 operational capabilities.

By imposing stringent, traditional exchange control requirements on these digital transactions, South Africa risks isolating itself from a rapidly expanding, machine-driven global economy. De Jager warns that such a regulatory regime could effectively cut off the country from a significant and growing segment of the international economic landscape, potentially hindering its ability to integrate with future digital advancements and cross-border commerce.

Beyond the immediate focus on stablecoins, another transformative theme discussed at the Money Summit was the tokenisation of real-world assets. This innovative process involves converting ownership rights of tangible assets, such as property, commodities, or other investments, into smaller, divisible digital units that can be traded on a blockchain. This mechanism holds the potential to democratize access to investments that were historically illiquid or exclusively available to a select group of wealthier investors.

Tokenisation offers several compelling advantages, including the ability to broaden investment participation and enhance market efficiency. Rob Downes highlighted that this approach can significantly accelerate settlement times for transactions. Instead of enduring multi-day waiting periods for payments to clear, investors could receive their funds almost instantaneously, thereby improving liquidity and operational speed within financial markets.

Lawyers and compliance officers in South Africa must closely monitor the South African Reserve Bank's proposed exchange control rules for crypto assets, as these regulations will directly impact the operational viability of stablecoin-based services, cross-border transactions, and the broader digital economy, requiring strategic adjustments for financial institutions and fintechs.

Source: Original reporting via Moneyweb