South African Crypto Exchanges Push for Regulatory Change to Allow Pension Fund Investment

Cryptocurrency exchanges have argued that pension funds should be allowed to invest in crypto assets, enabling South Africans to benefit from the substantial growth in cryptocurrency value.

South African Treasury Urged to Formulate Progress-Promoting Policies

South African crypto exchanges have called on authorities to remove a prohibition barring pension funds from investing in crypto assets. They argue that regulations giving pension funds an option to invest in other assets need to be reviewed to allow South Africans to benefit from the growth in value of crypto assets.

On Jan. 2, Farzam Ehsani, founder and CEO of VALR, one of the leading South African crypto exchanges, noted on X that since the prohibition came into force, crypto assets have seen their value grow astronomically. During the same period, South Africans have seen the local currency depreciate, eroding their savings.

“Since then [January 2023] crypto assets have increased 4.25x ($800bn -> $3.4tn), a 325% increase. Bitcoin specifically appreciated 5.8x ($16.5k -> $96k), a 480% increase. Let 2025 be the year that Regulation 28 changes to give pension funds the option of including crypto assets,” Ehsani said.

In a subsequent post, the VALR founder entreated the South African Treasury to ensure its policy promotes progress. He also called on the treasury to reach out to industry players should it need help formulating a national cryptocurrency policy.

Marius Reitz, general manager at Luno Africa, is quoted in a Moneyweb report as echoing Ehsani’s remarks and suggesting that the removal of the prohibition will align South Africa with global financial market leaders. Reitz said:

“While cryptocurrencies are currently excluded from the asset classes permitted to be held in collective investment schemes, a shift to a more permissive environment, in line with global financial market leaders like the US and UK, could catalyse increased institutional participation and further boost investor protection.”

South African regulations initially allowed pension funds to invest up to 2.5% of their holdings in crypto assets, as reported by Bitcoin.com News. However, a government proposal in late 2021 barred such investments entirely, both directly and indirectly. As confirmed by Ehsani, this prohibition finally took effect in January 2023.

At the time, the South African finance ministry justified the move as a way to protect consumers from the risks associated with cryptocurrencies. However, crypto exchange platform Afridax CEO Frank Leonette argues that the current regulation needs to be amended. He believes South Africans should be allowed exposure to crypto assets, considering their strong performance over the past decade.

“Many South Africans want to diversify their pension funds and benefit from the incredible performance of Bitcoin and similar crypto assets,” Leonette argued.