For an African trader, stablecoins are a medium to buy in and out of the market; for a freelancer, it’s higher pay and faster transactions; for organizations, it’s cheaper cross-border payments and faster settlement times. Stablecoins are efficient, but South Africa’s central bank just said it’s too efficient, citing how this particular digital asset threatens SA’s financial stability.
However, South African Reserve Bank, just declared stablecoins “too efficient”, warning that the same digital assets solving Africa’s payment problems could destabilize its entire banking system.
With R80 billion ($4.6B) now flowing through SA’s stablecoin markets up 1,900% since 2022 SARB’s alarm reveals a continent-wide tension. The tools driving financial inclusion may also be eroding monetary sovereignty.
Why SARB crypto regulation is tightening now
In Africa’s most pro-crypto market, the unexpected just happened: SARB just issued a warning against the continuous use of global stablecoins. A country that houses most of Africa’s bitcoin ATMs has red-flagged stablecoins over their rising potential to destabilize its economy.
The twist, however, is because actual data backs this claim. The 2025 Financial Stability Review identifies stablecoin and crypto assets as a mounting threat to the nation’s economic architecture. Currently, the nation houses a combined 7.8 million users across the country’s three largest exchanges.
These are active participants with roughly $1.5 billion in assets held in custody at the end of 2024 and trading volumes in stablecoins that jumped from 4 billion rand in 2022 to nearly 80 billion rand ($4.6 billion) by October 2025.
While cryptocurrencies are a rising issue, SARB’s main concern is dollar-pegged stablecoins. In under three years USDT and USDC have overtaken industry leaders like Bitcoin, Ether, XRP, and Solana. Their success has even pooled in numerous new variations, like USDPT and PYUSD. Their appeal is in their relatively consistent value, providing USD access with blockchain accessibility, user control, and privacy.
SARB is concerned about how stablecoins bypass exchange control regulations. The bank puts it plainly: without transparent, consistent data on adoption, use, and links to traditional finance, “risks may build up undetected.”
Herco Steyn, SARB’s lead macroprudential specialist, distilled the vulnerability:
“Without a complementary and full regulatory framework, we do not have sufficient oversight.”
But the main question lies in how it all went down. South Africa has one of the earliest and most comprehensive regulations in Africa. SARB crypto regulation identified crypto as a financial product in 2022, implemented the Travel Rule, and has licensed over 200 businesses.
The answer lies in its high adoption rate. Stablecoins inherently do not align with existing exchange control rules, and in response, authorities are moving to make amendments to their current crypto laws.
“Due to their exclusively digital—and therefore borderless—nature, crypto assets can be used to circumvent the provisions of the Exchange Control Regulations.”
This includes updating the Exchange Control Regulations, 1961, to explicitly incorporate cryptocurrencies and close loopholes in how stablecoins bypass exchange control regulations.
The surge in stablecoin adoption is creating a systemic threat to financial stability.
Since 2022, SARB and the majority of African regulators have witnessed a clear structural shift. Initially everyone pegged their hopes on Bitcoin, but volatility heavily hindered mass adoption. This very need for stability led to stablecoin and the rest; the data speaks for itself. On major SA platforms like Uno, VALR, and Ovex, stablecoin adoption surged alongside trading volumes that climbed from 4 billion rand to nearly 80 billion rand by October 2025.
Coincidentally, Standard Chartered issued a similar warning. According to the bank, digital dollars could drain as much as $1 trillion from emerging-market bank deposits over the coming three years as consumers and corporations increasingly shift savings toward stable, USD-pegged alternatives.
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SARB backs this data, highlighting 8 countries positioned along an opportunity-vulnerability spectrum. Egypt, Pakistan, Bangladesh, and Sri Lanka emerged as most exposed to deposit outflows, but the bank explicitly included South Africa, Brazil, Kenya, Turkey, India, and Morocco among vulnerable nations—particularly those running twin deficits (both fiscal and current account imbalances).
Stablecoin adoption is at an all-time high, with many rushing towards its numerous benefits. Even “modest” outflows representing roughly 2% of total deposits could destabilize countries already confronting weak currencies and constrained fiscal positions. It’s a direct threat to financial stability, especially in Africa, where the rave is all about stablecoins.
However, the concern was foreseen. Governor Lesetja Kganyago stated:
The creation of stablecoins, especially the dollar stablecoins, is being used to undermine African currencies. We see the rise in the use of stablecoins on the African continent in countries that are experiencing a shortage of forex, so people are creating their own forex.
The rate of stablecoin use threatens monetary sovereignty, a major concern, especially given the stablecoin’s usability. Kganyago added:
“People are almost like creating their own foreign exchange in that route, and I worry that some of the countries might actually lose monetary sovereignty because if people migrate in that space, then, uh, we have a problem.”
Key Takeaways
Volume Explosion (South Africa): Stablecoin trading volumes surged 1,900%, from R4B (2022) to $80B by Oct 2025, with 7.8M active users and $1.5B in assets held in custody across the country’s three largest exchanges.
Regulatory Response (Exchange Controls): SARB is moving to amend the Exchange Control Regulations (1961) to explicitly cover crypto and close stablecoin circumvention loopholes—signaling tighter reporting, KYC, and transaction monitoring expectations for licensed CASPs/VASPs.
Systemic Risk Alert (Deposit Flight): Policymakers are increasingly focused on bank deposit outflows as users shift savings into “digital dollars.” Standard Chartered warns up to $1T could drain from emerging-market deposits in three years; SARB flags South Africa among vulnerable markets, alongside peers like Kenya.
Five Transmission Channels (How Stability Breaks): The article frames stablecoin risk through five pathways: weaker monetary policy transmission, faster capital flight in stress events, currency substitution, higher FX volatility, and financial disintermediation that reduces banks’ lending capacity.
Continental Convergence (Regulatory Tightening): Similar sovereignty and financial integrity concerns are surfacing across Africa. Nigeria has raised alarms around offshore-like flows and informal FX activity, while Kenya’s VASP Act (Oct 2025) positions the central bank as the licensing authority for stablecoin issuers, pointing to broader rule-tightening through 2026.
What This Means for Businesses: Dollar-pegged stablecoins (USDT/USDC) are now the center of regulatory attention because they enable USD access outside formal FX channels. Expect higher compliance costs, stricter oversight, and a growing preference for licensed platforms as regulators move from “adoption watching” to “market control.
A Continental Perspective
The risks global stablecoins pose to African economies manifest through five primary transmission channels:
- Weakened monetary policy transmission
- Accelerated capital flight during stress events
- Currency substitution that erodes demand for local money
- Amplified exchange rate volatility
- Financial disintermediation reduces the capacity of banks to lend.
SARB isn’t alone in acknowledging the risk global stablecoins pose to African economies.
Central Bank of Nigeria Governor Olayemi Cardoso echoed concerns about monetary sovereignty during the October 2025 IMF/World Bank meetings, noting that stablecoins raise “important questions around monetary sovereignty, exchange rate stability, and financial integrity.”
The IMF’s technical assessment for Nigeria documented “undetected capital outflows and currency speculation” via stablecoin markets, including a mechanism where funds are effectively moved offshore without touching formal FX channels. Authorities reported about $26 billion in crypto transactions in 2024 flowing through unlicensed exchanges and subsequently banned peer‑to‑peer crypto transactions to limit circumvention.
An IMF-commissioned group sent to Kenya found domestic companies regularly using USDT to settle foreign invoices during USD shortages and to hedge a weakening shilling, clear evidence of currency substitution pressures.
Chainalysis estimated $3.3 billion in stablecoin transactions in the year to June 2024. In October 2025, Kenya’s Virtual Asset Service Providers Act designated the central bank as the licensing authority for stablecoin issuers, with explicit oversight duties tied to monetary stability.
The irony is that we all thought that crypto would cause issues with financial stability, only for its more “stable” version to be the fuel of economic breakdown for most African countries.
As African regulators race to update decades-old exchange control frameworks, the window for compliance is closing fast. SARB’s warning isn’t just about South Africa, it’s a preview of the coordinated regulatory tightening that will reshape stablecoin markets across the continent throughout 2026.
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