Luno Pushes South Africa to Rewrite Crypto Rules Through Parliament, Not Proclamation

Luno has formally challenged South Africa’s proposed capital flow regulations, which aim to place digital assets under a modernized exchange control regime.

The draft rules, jointly published by the Treasury and the South African Reserve Bank for public comment, aim to modernize the country’s exchange controls. However, Luno warns that the proposal contains highly restrictive measures that threaten fundamental property and privacy rights.

In its submission, Luno raised serious alarms over three specific enforcement provisions: asset seizure without court orders, forced liquidations and business-ending sanctions. Marius Reitz, Luno’s general manager for Africa, argued that changes of this magnitude must not be enacted via ministerial regulation.

“By proceeding through ministerial regulation, the executive branch effectively bypasses the democratic process for changes that will affect the fundamental property and privacy rights of millions of South Africans,” Reitz said. “They should, in our view, have been enacted as a new Act passed through Parliament.”

The exchange warned that the proposed reporting requirements for transactions above an unspecified threshold would create an “unmanageable administrative burden” for platforms and the state alike, given that large transaction volumes are processed within seconds.

“Our experience demonstrates that overly restrictive regulation simply pushes digital asset activity underground or offshore, beyond the reach of domestic regulators and tax authorities,” the company added.

“South Africa needs a regulatory framework that protects the integrity of the digital asset system without stifling the innovation, investment and economic growth that the digital asset sector is uniquely positioned to deliver,” Reitz said.