VALR’s Ehsani Warns Crypto Curbs Could Reduce Regulatory Oversight

VALR co-founder and CEO Farzam Ehsani warned that South Africa’s proposed cross-border crypto regulations could severely harm the local digital asset sector, stifle innovation, and drive capital offshore.

South Africa’s new proposed cross-border cryptocurrency framework risks severely damaging the domestic digital asset industry and driving financial activity underground unless key provisions are substantially revised, according to Farzam Ehsani, co-founder and chief executive officer of VALR.

While acknowledging positive adjustments in the draft—specifically that a reportable event is triggered upon withdrawing funds from a crypto asset service provider (CASP) rather than at the initial asset purchase—Ehsani said the proposals remain prejudicial to licensed local operators.

“South Africa would be better served by abolishing exchange controls altogether while preserving appropriate reporting, transparency and regulatory surveillance, rather than attempting to retrofit a half-century-old regulatory regime onto modern technology and the digital economy,” Ehsani told Bitcoin.com News.

Ehsani argued that these restrictions create perverse incentives for businesses and retail users alike. By blocking legitimate corporate transactions—particularly cross-border stablecoin payments that offer faster, cheaper, and more transparent settlement than legacy banking networks—the rules will undermine the regulatory oversight authorities are seeking.

“By prohibiting legitimate corporate activity through regulated providers, the proposed framework is likely to drive transactions underground or offshore,” Ehsani said. “This would reduce the very visibility and surveillance that National Treasury and the SARB seek to achieve, while undermining employment, tax revenue, investment, innovation and business formation.”

Ehsani also highlighted concerns regarding self-custody wallets, noting that treating transactions from non-custodial wallets as non-permissible is neither practical nor sensible. He warned that such a restriction will push South African users toward foreign, unregulated exchanges rather than local, licensed platforms, conflicting with the central bank’s objective of monitoring capital within the country.

“If South Africa chooses to retain capital controls, it should at least apply them on a principled, fair and technology-neutral basis,” Ehsani said. “Regulation should govern the movement of value and manage the associated risks; it should not dictate which technologies individuals and businesses can use.”

The National Treasury and the SARB have opened the draft crypto asset manual for public comment through Sept. 30. Authorities emphasized that the draft guidelines remain subject to refinement following stakeholder engagement before final implementation.

Ehsani expressed optimism that the consultation process would yield a more balanced regime. “We face a fundamental choice in South Africa: whether we are serious about overcoming our economic challenges, unlocking growth and becoming a globally competitive force, or whether our frameworks undermine those ambitions,” he said.