South Africa has a major opportunity to boost government revenue, attract institutional capital, and strengthen its regulatory standing by simply updating how it classifies crypto assets.
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TL;DR
Reclassifying crypto as onshore could bring in $29.7 million in extra taxes over 5 years
Institutional investors are eager but blocked by outdated rules
Courts and regulators have opened the door to reform—now policy must follow
Luno and other players are ready to support tax-compliant growth through automation and transparency
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According to Luno, a leading South African-founded crypto exchange, reclassifying cryptocurrencies as onshore assets could generate an estimated $29.7 million (R540 million) in additional tax revenue over the next five years.
“This is a low-hanging fruit,” says Marius Reitz, GM for Africa and Europe at Luno.
“Classifying crypto as onshore gives regulators visibility, encourages formal adoption, and opens the door to tax reporting automation.”
REGULATION | Is Regulation Slowing Down South Africa’s Crypto Momentum?
Brent Petersen from the Crypto Asset Association of South Africa ( #CaaSA ) weighs in on what’s helping – and hurting – the local crypto scene.https://t.co/ZFIFdRjQ3x @Moneyweb @brentpetersen pic.twitter.com/m0XrMNLmOb
— BitKE (@BitcoinKE) April 9, 2025
Why $29.7 Million Matters
Luno’s analysis assumes that only 1% of institutional funds are allocated into a regulated Bitcoin ETF. Even under conservative growth assumptions, the capital gains generated from such an allocation could yield nearly $30 million in additional taxes.
But Bitcoin’s actual performance over the past five years has far exceeded these estimates. At over $110,000 (R2,010,800) today, Bitcoin has grown more than 1,000%, suggesting the real potential tax revenue may be much higher.
MILESTONE | #Bitcoin $BTC is Now the 5th Largest Asset by Market Capitalization
This represents Bitcoin’s highest-ever ranking, despite its market cap having previously surpassed $2 trillion when its price exceeded $109,000.https://t.co/8NP2dckXyG @Bitcoin @BTC_Archive pic.twitter.com/k2kp3uADW1
— BitKE (@BitcoinKE) April 23, 2025
The Classification Problem
South Africa’s exchange control rules, dating back to 1961, do not define whether cryptocurrencies are considered onshore or offshore assets. This creates a regulatory grey area that:
Prevents institutional players from including crypto in their portfolios
Blocks the development of regulated crypto ETFs and investment products
Reduces potential tax revenue for the government
“This is a classification issue, not a technical or policy one,” says Reitz.
“It could be solved with a single regulatory update.”
REGULATION | South African Reserve Bank Moves Quickly Appealing Against High Court Ruling on Exchange Controls @SAReserveBank says the court made an error effectively creating a loophole that could allow exporting unlimited funds via #cryptohttps://t.co/rwfFkT2M20 pic.twitter.com/WdJrybR1FM
— BitKE (@BitcoinKE) June 10, 2025
Legal and Regulatory Shifts Already Underway
South African regulators and courts are already nudging in this direction:
Court Ruling: A May 2025 North Gauteng High Court decision found that South Africa’s outdated exchange control regulations do not apply to crypto, urging lawmakers to modernize.
REGULATION | South African High Court Rules Cryptocurrencies Not Subject to Capital Controls
The case originated when @StandardBankZA sued the @SAReserveBank for seizing ~$1 million from a Standard Bank account.
The central bank lost the case.https://t.co/k6ktdNRCep pic.twitter.com/2aPtq4QkiY
— BitKE (@BitcoinKE) May 26, 2025
FSCA Licensing: The Financial Sector Conduct Authority (FSCA) has begun licensing crypto firms under its financial products classification.
REGULATION | South Africa Has Now Approved 248 Crypto Providers Out of 420 Received So Far, Only 9 Applications Rejected
This post identifies two key areas that resulted from applications getting rejected by the FSCA.https://t.co/9osgvhErjt @fscasouthafrica pic.twitter.com/2fvVgBZoty
— BitKE (@BitcoinKE) December 16, 2024
SARS Enforcement: The South African Revenue Service (SARS) has increased crypto-related audits and pledged to implement the OECD’s Crypto-Asset Reporting Framework (CARF) by 2027.
REGULATION | The South Africa Revenue Service (SARS) Begins Issuing Tax Notices to Crypto Traders
Failure to provide requested information could be deemed a criminal offense under the Tax Administration Act, the officers say. The national revenue authority has adopted a… pic.twitter.com/NZ5vJJlHZz
— BitKE (@BitcoinKE) September 9, 2024
Luno’s Position in South African Crypto Policy
Founded in 2013, Luno is one of Africa’s most established crypto exchanges and a frequent voice in regulatory discussions. BitKE has previously covered Luno’s:
Push for integrated tax reporting tools tied to SARS for easier crypto declarations
Calls for updated policy frameworks to unlock institutional adoption
Coin listing vetting processes aimed at protecting retail users
Luno continues to work closely with regulators and sees classification clarity as the next big milestone in South Africa’s crypto evolution.
“Digital assets hold immense promise as a source of increased tax income in a country that desperately needs it,” Reitz emphasised.
“Right now, regulatory obstacles are limiting the tax generated from digital asset returns. The industry can, and should, contribute to South Africa’s inclusive growth.”
MILESTONE | Luno Becomes the First Dedicated Crypto Service to Receive the South African Financial Services Provider License
This achievement marks a significant milestone, as Luno is said to be the first dedicated crypto service to gain recognition under the recent… pic.twitter.com/mLD5A3xyul
— BitKE (@BitcoinKE) April 13, 2024
Global Comparison: South Africa vs the World
United States: Bitcoin ETFs managed by BlackRock and Fidelity have drawn in over $70 billion in assets.
UK: Pension funds have begun allocating up to 3% to digital assets.
Nigeria: Regulatory clampdowns pushed crypto activity underground, weakening oversight and losing tax potential.
South Africa sits at a crossroads: follow global best practices and unlock formal participation – or risk stagnation in an increasingly digital financial future.
MILESTONE | #Bitcoin ETFs Set a New Monthly Inflows Record in November 2024 – Now Account for Almost 6% of Total BTC Supply
The new record surpasses the February 2024 record.
Currently, all Bitcoin ETFs now hold around 1.128 million BTC.https://t.co/OYdtVhHF1U pic.twitter.com/AhL6P5YQpG
— BitKE (@BitcoinKE) December 2, 2024
Read More from BitKE:
REGULATION | South African High Court Rules Cryptocurrencies Not Subject to Capital Controls
REGULATION | South Africa Risks Falling Behind Due to Bitcoin Policy Uncertainty, Say Local Stakeholders
South Africa’s Financial Regulator, FSCA, Declares Crypto Assets as a Financial Product
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