REGULATION | South Africa Could Unlock ~$30 Million in Tax Revenue in 5 Years by Modernizing Crypto Rules, Says Luno

South Africa has a major opportunity to boost government revenue, attract institutional capital, and strengthen its regulatory standing by simply updating how it classifies crypto assets.

TL;DR

• Reclassifying crypto as onshore could bring in $29.7 million in extra taxes over 5 years
• Institutional investors are eager but blocked by outdated rules
• Courts and regulators have opened the door to reform—now policy must follow
• Luno and other players are ready to support tax-compliant growth through automation and transparency

According to Luno, a leading South African-founded crypto exchange, reclassifying cryptocurrencies as onshore assets could generate an estimated $29.7 million (R540 million) in additional tax revenue over the next five years.

“This is a low-hanging fruit,” says Marius Reitz, GM for Africa and Europe at Luno.

“Classifying crypto as onshore gives regulators visibility, encourages formal adoption, and opens the door to tax reporting automation.”

Why $29.7 Million Matters

Luno’s analysis assumes that only 1% of institutional funds are allocated into a regulated Bitcoin ETF. Even under conservative growth assumptions, the capital gains generated from such an allocation could yield nearly $30 million in additional taxes.

But Bitcoin’s actual performance over the past five years has far exceeded these estimates. At over $110,000 (R2,010,800) today, Bitcoin has grown more than 1,000%, suggesting the real potential tax revenue may be much higher.

The Classification Problem

South Africa’s exchange control rules, dating back to 1961, do not define whether cryptocurrencies are considered onshore or offshore assets. This creates a regulatory grey area that:

• Prevents institutional players from including crypto in their portfolios
• Blocks the development of regulated crypto ETFs and investment products
• Reduces potential tax revenue for the government

“This is a classification issue, not a technical or policy one,” says Reitz.

“It could be solved with a single regulatory update.”

Legal and Regulatory Shifts Already Underway

South African regulators and courts are already nudging in this direction:

• Court Ruling: A May 2025 North Gauteng High Court decision found that South Africa’s outdated exchange control regulations do not apply to crypto, urging lawmakers to modernize.

• FSCA Licensing: The Financial Sector Conduct Authority (FSCA) has begun licensing crypto firms under its financial products classification.

• SARS Enforcement: The South African Revenue Service (SARS) has increased crypto-related audits and pledged to implement the OECD’s Crypto-Asset Reporting Framework (CARF) by 2027.

Luno’s Position in South African Crypto Policy

Founded in 2013, Luno is one of Africa’s most established crypto exchanges and a frequent voice in regulatory discussions. BitKE has previously covered Luno’s:

• Push for integrated tax reporting tools tied to SARS for easier crypto declarations
• Calls for updated policy frameworks to unlock institutional adoption
• Coin listing vetting processes aimed at protecting retail users

Luno continues to work closely with regulators and sees classification clarity as the next big milestone in South Africa’s crypto evolution.

“Digital assets hold immense promise as a source of increased tax income in a country that desperately needs it,” Reitz emphasised.

“Right now, regulatory obstacles are limiting the tax generated from digital asset returns. The industry can, and should, contribute to South Africa’s inclusive growth.”

Global Comparison: South Africa vs the World

• United States: Bitcoin ETFs managed by BlackRock and Fidelity have drawn in over $70 billion in assets.
• UK: Pension funds have begun allocating up to 3% to digital assets.
• Nigeria: Regulatory clampdowns pushed crypto activity underground, weakening oversight and losing tax potential.

South Africa sits at a crossroads: follow global best practices and unlock formal participation – or risk stagnation in an increasingly digital financial future.

Read More from BitKE:

• REGULATION | South African High Court Rules Cryptocurrencies Not Subject to Capital Controls
• REGULATION | South Africa Risks Falling Behind Due to Bitcoin Policy Uncertainty, Say Local Stakeholders
• South Africa’s Financial Regulator, FSCA, Declares Crypto Assets as a Financial Product

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