Cryptocurrency exchanges in South Africa are advocating for pension funds to be given the opportunity to invest in crypto assets, allowing citizens to capitalize on the significant growth in cryptocurrency value.
Push for Policy Changes from South African Treasury
South African crypto exchanges are urging authorities to reconsider regulations that currently prohibit pension funds from investing in crypto assets. They argue that by giving pension funds the option to invest in a wider range of assets, South Africans can take advantage of the growth potential offered by crypto assets.
Farzam Ehsani, the founder and CEO of VALR, a prominent South African crypto exchange, highlighted the exponential growth in the value of crypto assets since the prohibition was put in place. With the local currency depreciating, Ehsani emphasized the need for Regulation 28 to be updated to allow pension funds to include crypto assets in their portfolios.
“Since January 2023, crypto assets have experienced a 325% increase in value, with Bitcoin alone appreciating by 480%. It is time for Regulation 28 to evolve and provide pension funds with the opportunity to invest in crypto assets,” Ehsani stated.
In a plea to the South African Treasury, Ehsani emphasized the importance of policies that support progress and innovation. He also offered the assistance of industry players in shaping a comprehensive national cryptocurrency policy.
Marius Reitz, the general manager at Luno Africa, echoed Ehsani’s sentiments, suggesting that lifting the prohibition on pension funds investing in crypto assets would align South Africa with global financial market standards. Reitz highlighted the potential for increased institutional participation and enhanced investor protection in a more permissive environment.
Initially, South African regulations allowed pension funds to allocate up to 2.5% of their holdings to crypto assets. However, a government proposal in late 2021 completely restricted such investments, citing consumer protection concerns. This prohibition officially took effect in January 2023, according to Ehsani.
Frank Leonette, the CEO of Afridax, a crypto exchange platform, argued for a revision of the current regulations, emphasizing the strong performance of crypto assets over the past decade. Leonette emphasized the desire of many South Africans to diversify their pension funds and participate in the growth potential of Bitcoin and other crypto assets.