VALR CEO Warns Proposed Crypto Curbs Could Reduce Regulatory Oversight
VALR co-founder and CEO Farzam Ehsani has warned that South Africa’s proposed cross-border cryptocurrency regulations could severely harm the local digital asset sector, stifle innovation, and drive capital offshore.
The National Treasury and the South African Reserve Bank (SARB) released draft rules governing cross-border crypto transfers. Ehsani commented on the draft, noting positive aspects such as reportable events triggered upon withdrawal from a crypto asset service provider (CASP) rather than at purchase. However, he said the proposals remain prejudicial to licensed local operators.
Under the draft rules, individual residents can transfer crypto offshore within existing foreign currency allowances, but corporate entities are restricted from conducting cross-border crypto transactions. Additionally, inbound transfers from private, non-custodial self-custody wallets are classified as non-permissible for local CASPs.
Ehsani argued that these restrictions create perverse incentives, driving legitimate corporate transactions—particularly cross-border stablecoin payments—underground or offshore. This would reduce the visibility and surveillance that authorities seek, while undermining employment, tax revenue, investment, and innovation.
He also highlighted concerns about self-custody wallets, saying that treating transactions from non-custodial wallets as non-permissible is impractical and will push users toward foreign unregulated exchanges instead of local licensed platforms.
Ehsani called for a principled, technology-neutral approach to capital controls, suggesting that regulation should govern the movement of value and manage risks, not dictate technology use.
His comments come nearly a month after fellow South African exchange Luno formally challenged the proposed rules, arguing that the government’s approach risks driving crypto activity underground and outside regulatory reach.
The National Treasury and SARB have opened the draft for public comment through September 30. Authorities emphasized that guidelines remain subject to refinement after stakeholder engagement.
Ehsani expressed optimism that the consultation process would yield a more balanced regime, emphasizing a fundamental choice for South Africa between overcoming economic challenges and having frameworks that undermine those ambitions.