Simply revising a single aspect of South Africa’s cryptocurrency regulations to align with global standards could generate at least R540 million in additional tax revenue for the government. This conservative estimate comes from Luno, one of the world’s oldest and largest crypto exchanges, now operating in 40 countries and originally founded in South Africa.
In light of South Africa’s sluggish economic growth, mounting debt, and urgent social needs, leveraging digital assets for economic expansion has never been more critical.
Marius Reitz, Luno’s General Manager for Africa & Europe, highlights the opportunity: “Digital assets, particularly Bitcoin, have vastly outperformed traditional investments like stocks and bonds over the past decade. However, local institutional investors are missing out on these high returns, ultimately reducing potential tax revenue.”
Bitcoin recently hit an all-time high of over R2 million, showcasing 1,000% growth in just five years.
How the R540m Tax Boost Was Calculated
Luno’s estimate assumes that just 1% of institutional funds would flow into a digital asset product like a Bitcoin ETF. Factoring in conservative annualized returns and applicable tax rates, the potential revenue becomes clear.
Currently, South Africa lacks clear classification for digital currencies as either offshore or onshore assets, creating uncertainty for asset managers. This ambiguity prevents the launch of cryptocurrency-based investment products, such as Exchange-Traded Funds (ETFs), which track assets like Bitcoin.
Reitz explains: “Regulatory clarity is key. If digital assets were designated as ‘onshore’—as seen in other leading markets—South African asset managers could offer crypto ETFs, driving investment, increasing profits, and boosting capital gains tax collections.”
Global Trends Show the Potential
The demand for crypto investment products is undeniable. BlackRock, the world’s largest asset manager, launched a Bitcoin ETF in 2024, which quickly amassed over $70 billion (R1.2 trillion) in investments—making it the fastest-growing ETF in BlackRock’s history.
ETFs are investment vehicles traded on stock exchanges, tracking assets like cryptocurrencies, commodities, or currencies. Their success globally underscores the missed opportunity in South Africa.
A Call for Regulatory Clarity
South Africa must act swiftly to stay competitive. Clear exchange control designations for both individual and institutional investors are essential.
Reitz points to global shifts: “Last year, a UK pension fund allocated 3% of its portfolio to Bitcoin. This signals a major shift in how institutional investors view digital assets—no longer as speculative, but as strategic holdings.”
Beyond Investors: A Win for the Fiscus
The benefits extend beyond investors. Digital assets represent a lucrative source of tax revenue for a nation in dire need of funding. Currently, regulatory barriers limit the tax potential from crypto gains.
“The digital asset industry can drive inclusive growth in South Africa,” says Reitz. “By modernizing regulations, we can unlock billions in economic value while strengthening the fiscus.”
South Africa has a clear choice: embrace progressive crypto policies and reap the rewards—or fall behind as the global economy evolves.
