Ehsani of VALR Warns That Cryptocurrency Restrictions Could Lead to Weakened Regulatory Oversight
Farzam Ehsani, co-founder and CEO of VALR, warns that South Africa's proposed regulatory framework for cross-border cryptocurrency transactions could severely harm the domestic digital asset industry and push financial activity into the shadows unless key provisions are substantially revised. Commenting on draft guidance from the National Treasury and the South African Reserve Bank (SARB), Ehsani argues that applying decades-old capital controls to modern technology threatens jobs, local investment, and business innovation.
While acknowledging a positive change—that reporting is triggered when funds exit a licensed Crypto Asset Service Provider (CASP), not at purchase—Ehsani states the proposals still disadvantage licensed local operators. He suggests South Africa would benefit more from fully abolishing exchange controls while maintaining proper reporting and oversight, rather than forcing a half-century-old regulatory regime onto the digital economy.
The draft rules allow resident individuals to send crypto abroad within existing exchange allowances but restrict legal entities from cross-border crypto transactions. It also deems certain inbound transfers from private, non-custodial wallets as impermissible for local CASPs. Ehsani contends these restrictions create perverse incentives. By blocking legitimate corporate transactions, especially cross-border stablecoin payments that offer faster, cheaper settlement, the rules would undermine the very regulatory oversight authorities seek, likely pushing transactions offshore or underground and reducing transparency.
Ehsani also criticizes the treatment of self-custody wallets, warning that labeling transactions from non-custodial sources as inadmissible is impractical and will drive users to foreign, unregulated exchanges instead of local licensed platforms. If South Africa maintains capital controls, he argues they should be applied on a principled, fair, and technology-neutral basis, regulating value movement and risk rather than dictating technology choices.
His comments follow a similar challenge from another local exchange, Luno, last month. The draft guidance is open for public comment until September 30. Ehsani remains optimistic the consultation will lead to a more balanced regime but stresses South Africa faces a fundamental choice: either unlock growth and global competitiveness or let its regulatory framework undermine those ambitions.
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