Experts raise red flag over looming threat to financial system: 'A significant concern'

The South African Reserve Bank is sounding the alarm over a rapidly expanding financial trend it says could expose the country to new systemic risks. 

What's happening?

In its 2025 Financial Stability Review, the central bank warned that gaps in regulation surrounding cryptocurrencies and stablecoins are leaving major vulnerabilities in place amid rising adoption across African markets.

SARB said the absence of a comprehensive regulatory framework for crypto assets and stablecoins has become a key weakness in the country's financial system, especially as digital currencies are increasingly being used across borders.

Because crypto is digital and borderless, SARB noted that it can bypass existing exchange control rules, which currently do not cover digital assets. 

The bank's lead macroprudential specialist, Herco Steyn, cautioned that the lack of complementary rules limits oversight and could elevate risks until reforms arrive, describing the situation as "a significant concern."

Authorities expect progress on new rules next year, including amendments to exchange control regulations and unified reporting standards for crypto-asset institutions.

Why is this important?

Unregulated crypto markets can create blind spots for financial authorities, especially in countries where access to foreign currency is restricted. 

SARB Governor Lesetja Kganyago warned that the rapid growth of stablecoins could undermine central bank sovereignty by allowing users to effectively "manufacture" dollars outside traditional monetary oversight.

When a financial system can't track or manage large capital flows, issues like inflation exposure, currency instability, or sudden value swings can escalate — raising the stakes for both consumers and institutions already navigating economic volatility.

Crypto also carries complicated environmental implications. Certain cryptocurrencies require massive amounts of electricity for mining and validation, contributing to dirty energy pollution.

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At the same time, other projects are experimenting with renewable-powered operations and even exploring ways to finance clean energy infrastructure.

What's being done about it?

SARB and the National Treasury are working on formal regulatory amendments, updated reporting frameworks, and cross-border monitoring tools. 

More than 240 companies have already received licenses from the Financial Sector Conduct Authority — an early sign that oversight is expanding.

Everyday consumers can stay informed, scrutinize financial platforms carefully, and support transitions toward cleaner financial systems, including banking practices or investments that promote renewable-energy development.

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