Strengthening Stablecoin Regulation in South Africa Through Inter-Agency Collaboration

How has South Africa’s approach to stablecoins evolved to date?

The Intergovernmental Fintech Working Group (IFWG), as a central hub for regulators, has helped the members understand and manage new technologies supporting a more proactive stance in their respective approaches. The IFWG’s approach can generally be described as risk-based, phased and functional. Meaning we aim to support the introduction of proportionate regulation that is focused on the underlying activity, cognizant of new/different risk sets that the underlying technology creates. 

The initial approach to stablecoins was a cautious “wait and see” approach as the penetration and use cases were still mostly in the experimentation phase. In 2025, there were six rand-backed and rand-pegged stablecoin arrangements in South Africa with several others being planned.¹ Since 2024, stablecoins globally in circulation has doubled, reaching around US$390 billion in December 2025,² necessitating a more robust, prioritised and harmonised approach.As work on assessing the potential implications of stablecoin arrangements from a macroeconomic perspective remain ongoing, the IFWG, through its Crypto Asset Regulatory Working Group (CAR WG), is focused on ensuring a robust and comprehensive policy and regulatory response to stablecoins, before stablecoins are widely adopted in South Africa. This work is structured in two parts, focused on rand-pegged stablecoins and foreign currency-pegged stablecoins. Building on its publication of the South African Stablecoin Landscape Diagnostic, and with a discussion paper on rand-pegged stablecoins due for public consultation in Q1 2026, the IFWG is now focusing its attention on foreign currency-pegged stablecoin arrangements to inform comprehensive and proportionate policy recommendations on the approach to stablecoins in South Africa. This will build on existing frameworks in place to regulate crypto assets in South Africa.³

What role has the IFWG played in shaping coordinated regulatory thinking?

The IFWG has served as South Africa’s central convening inter-agency forum for regulators, bringing together the policy-maker National Treasury, the Financial Intelligence Centre, Financial Sector Conduct Authority, National Credit Regulator, Prudential Authority, South African Reserve Bank, South African Revenue Service and the Competition Commission, to develop a shared view of fintech-driven opportunities and risks and to translate that view into coherent, practical approaches and policy recommendations.

The IFWG provides a forum that brings together prudential, conduct, financial crime, tax, competition, and policy authorities, enabling early, multidisciplinary horizon scanning and a shared understanding of emerging technologies and their business models. Anchored in common principles and a level-playing-field objective, it promotes responsible innovation without advantaging incumbents or new entrants, helping regulators converge on technology-neutral, risk-based expectations that are consistent across their different mandates. Through joint communication and engagement, the IFWG demystifies the landscape for industry, reducing fragmentation and the scope for regulatory arbitrage while improving predictability for innovators and incumbents. By creating spaces for controlled testing and learning through the regulatory sandbox and innovation accelerator, it supports evidence-based policy through policy recommendations, allowing requirements to be refined iteratively as risks are better understood. This collaborative, agile and responsible stance, in turn, enables timely, proportionate adjustments to the framework that safeguard consumers and the financial system without stifling innovation.

How has the IFWG approached engagement with market participants and other stakeholders?

The IFWG adopts a collaborative, inclusive, and test-and-learn multi-stakeholder engagement model designed to bring together financial innovators and regulatory authorities and facilitate constructive, evidence-based dialogue. To this end, the IFWG has created a shared Innovation Hub with three “engagement rails” (or innovation facilitators) that provides a three-tiered engagement model consisting of the:

1. Regulatory Guidance Unit (RGU): a single-entry point that consolidates informal, non-binding perspectives from all regulators, reducing duplicative outreach and conflicting signals to industry. The RGU also provides regulators with an indication of where innovation is happening as well as which sections and/or concepts in legislation are unclear.
2. Regulatory Sandbox (RSB): serves as a coordinated live-testing environment (rolling admission) where regulators and participants agree parameters, data and risk mitigants, turning experimentation into common evidence for policy development and appropriate regulatory frameworks.
3. Innovation Accelerator (IA): that has a two-fold value proposition: (a) It serves as a vehicle to provide a collaborative, exploratory environment for financial sector regulators to learn from and work with each other, and the broader financial sector ecosystem, on emerging innovations in the industry (experimentation with industry, see Project Khokha 1 and Project Khokha 2); and (b) It creates multi-agency working groups, including dedicated groups for crypto assets and open finance, and creates a standing venue for horizon-scanning, joint prioritization (e.g., crypto assets, stablecoins) and consistent messaging. These groups consult with market participants, academia and other subject matter experts to develop evidence-based policy recommendations that are cognizant of market dynamics.

What mechanisms have been most effective in coordinating mandates across different authorities?

A formal joint forum for coordination and policy-alignment, not just information sharing.

The IFWG comprises a broad set of regulatory authorities including the National Treasury. All the members are committed to collectively unpacking and understanding fintech-related matters and creating a joint approach that avoids regulatory arbitrage or negative downstream effects. The composition, commitment and explicit mandate means that this formally recognised forum for regulators can effectively communicate coherent policy and strategic direction. This has resulted in a coordinated policy response that is onboarded by the regulators and provides clarity on the direction of travel to the market at large.

Problem-specific working groups with shared analytical outputs.

The CAR WG was established under the IFWG to specifically define crypto assets, map use cases, identify risks by mandate, and produce a single, shared position paper and recommendations. This meant that all regulators worked from the same taxonomy, risk framing and evidence base, which allowed the regulators to implement rules without contradiction.

Regulatory sandbox as a coordination instrument, not just an innovation tool.

The RSB is explicitly designed as a multi-regulator environment, where testing occurs “under the supervision of relevant regulators” and regulatory relief is jointly agreed. Sandbox participants report progress regularly, generating information for regulators collectively.

This means that the RSB functions as a shared learning space, a real-world stress test of mandate boundaries and a pipeline from experimentation to policy reform.

Explicit mandate mapping within shared outputs.

The working groups under the IFWG explicitly distinguish between the various risks and mandates; and map those to a single regulatory response. For example, the CAR WG’s 2021 IFWG Position Paper on Crypto Assets explicitly distinguishes between AML/CFT risks (the FIC’s mandate), market conduct risks (the FSCA’s mandate) and exchange control and financial stability risks (the SARB’s mandate) in a singular and shared regulatory response.

This means that regulators can act in parallel rather than sequentially because each mandate is clearly scoped within a common framework.

Iterative feedback loops between experimentation, policy and implementation.

Coordination is a sustained and constant endeavour for the IFWG, not a once off. Regulators learn together, adjust together and re-enter the cycle of understanding policy development collectively.

For example, the RSB shifted from cohort-based to rolling admissions after a retrospective review, explicitly to improve regulatory responsiveness and co-ordination. While position papers are treated as ‘living documents’, with implementation tracked over time.⁴

What key lessons or insights could be relevant for other jurisdictions considering stablecoin regulation, particularly in jurisdictions navigating multi-authority oversight?

Grounded in recommendations and guidance from international standard setting bodies but localised first.

A significant amount of time and effort in the IFWG’s crypto journey (and now stablecoin journey) has focused on understanding the local context and permutations. This is especially important in a complex, evolving space like stablecoins when trying to maintain a posture that aims to realise the benefits while mitigating the risks.

💡Lesson: Understand local use cases and risks.

Explicitly design for overlapping mandates, rather than trying to eliminate them

The IFWG never attempted to create a single “lead regulator” for crypto or stablecoins. Instead, it accepted that stablecoins are inherently multi-functional and multi-risk, therefore some overlap is unavoidable.

Making the overlaps explicit and coordinated is what has mattered most. This is evident in joint position papers, shared definitions and parallel implementation (e.g. FSCA licensing, FIC AML obligations and SARB policy work).

💡Lesson: Effective coordination does not mean eliminating overlap; it means aligning expectations where overlap exists.

Separate policy sequencing from legal sequencing.

A subtle but powerful IFWG insight is that policy consensus does not require immediate legal harmonisation. In South Africa regulators aligned on principles and direction first then implemented within their existing mandates while legislative reform follows more slowly. This avoided paralysis while still moving coherently.

💡Lesson: In multi-authority systems, insisting on “perfect law first” delays action; insisting on “shared policy direction first” enables progress.

Make coordination visible to the market.

The IFWG has invested heavily in joint publications, public position papers and consistent external messaging. This mattered because firms and consumers could see that regulators were aligned, that mandates were complementary and that regulatory arbitrage would not be rewarded.

💡Lesson: Regulatory coordination is itself a supervisory signal.

Accept that coordination is a process, not a destination.

IFWG outputs are iterative, living documents and subject to revision as evidence improves. 

This mindset reduces institutional defensiveness, encourages learning and makes disagreement manageable.

💡Lesson: Moving together (regulators and the sector) is slower but probably improves the output.