South Africa Turns Attention to Stablecoins and Blockchain for Digital Payments

South Africa’s 2024 budget review highlights the need for structural reforms and a focus on improving public financial management. The annual budget reveals the country’s Treasury plan to promote the adoption of digital payments, including analyzing stablecoins and blockchain to enhance the lives and livelihoods of marginalized groups. The 2024 budget emphasizes the necessity of structural reforms and concentrates on enhancing public financial management. While detailing its plan to promote digital payments, the Treasury announced a policy shift towards crypto assets, specifically for stablecoins.

In 2024, the Inter-Governmental FinTech Working Group will release additions to include stablecoins as a specific type of crypto asset. This group, which published a digital currency regulatory paper in June 2021, will be updated to add stablecoins to the crypto asset class, finalizing the domestic status of stablecoins and conducting analytical work to understand applicable use cases for stablecoins and recommend appropriate policies and regulatory responses.

Moreover, the Financial Intelligence Centre Act (FICA) might be amended to require all institutions to report crypto transactions exceeding 49,999 South African Rand ($2,650). South Africa will also study the impact of blockchain-based tokenization on domestic financial markets, with the working group expected to publish a paper by December 2024 detailing the policy and supervisory implications of financial market infrastructure based on tokenization and blockchain. The South African government will also implement a three-year program, in collaboration with the Swiss Economic Affairs Secretariat and FinMark Trust, to execute four pilot digital payment projects.

These pilot projects aim to digitalize the community, digitalize payments for informal and low-income workers, cross-border remittances, and cross-border trade, supporting small and informal businesses through payment innovation. South Africa’s digital disruption plans for East African farmers have proved effective as blockchain technology opens global markets for remote populations. On July 20, 2023, AgTech company Dimitra and One Million Avocados (OMA), a sustainability-focused tech group, announced their partnership to assist Kenyan avocado farmers in increasing production and quality through emerging technologies, including blockchain.