Luno, a prominent South African cryptocurrency exchange operating in 40 countries, has urged the National Treasury to enact regulatory changes to classify digital assets as onshore assets when held on local licensed platforms.

These reforms are seen as critical to unlocking significant economic growth and generating much-needed revenue for the country’s fiscal health.

Historically, South Africa was a frontrunner in the cryptocurrency domain, but it now risks lagging behind as other countries embrace digital currencies as a recognised asset class for both institutional and individual investors.

The crux of Luno’s appeal to Finance Minister Enoch Godongwana revolves around the critical need to classify digital assets as onshore assets when held on local licensed platforms, paving the way for enhanced investment opportunities.

Currently, digital currencies are not designated as either offshore or onshore assets, making it very difficult for institutional investors to allocate capital or invest in assets such as Bitcoin. It also complicates efforts to report cross-border transactions to the Reserve Bank. Uncertainty about the status of digital assets is currently holding back growth in the sector.

Paul Harker, Luno's global head of legal and corporate strategy, said if cryptocurrencies were classified as an offshore asset, it severely limited how much can be held by asset fund managers and mutual investment funds, effectively restricting ordinary South Africans and corporate investors from benefiting from potential returns.

“Internationally, cryptocurrencies are now just another recognised asset class to invest in along with stocks, government bonds and fiat currencies,” Harker said. “In the current constrained fiscal reality our government has little room to maneuver. Pro-growth and forward-looking decisions are essential.”

Luno also recognised the progress made in South Africa’s regulatory framework surrounding digital assets.

The South African Revenue Service now acknowledges profits from cryptocurrency trading as taxable income, and the Financial Sector Conduct Authority has granted licenses to cryptocurrency exchanges as recognised financial service providers.

Additionally, it said the Intergovernmental Fintech Working Group’s efforts must not go unappreciated.

However, Luno country manager Christo de Witt said the average South African is still waiting to reap the full benefits of the digital asset revolution that has already transformed economies elsewhere.

“Treasury can take decisions that stimulate growth in digital assets, while also ensuring a safe and secure sector. It is a massive misconception that, in the cryptocurrency sector, huge growth and real safety are mutually exclusive,” De Witt said.

“Further close cooperation between government and industry can remove obstacles. We, after all, have the same goal: economic growth.”

Luno's call comes as US President Donald Trump recently announced a strategic US reserve of digital assets with the creation of a “strategic crypto reserve” that will include Bitcoin, Ether, XRP, Solana’s SOL token and Cardano’s ADA, in a post on Truth Social.

This was the first time Trump has specified his support for a crypto “reserve” versus a “stockpile.”

Nigel Green, CEO of independent financial advisory and asset management organization deVere Group, predicted that the global “crypto arms race” was on.

“Other nations will likely feel compelled to respond, and in doing so, Bitcoin and the wider cryptocurrency market are primed for unprecedented gains,” Green said.

“This move cements the legitimacy of digital assets in a way that will redefine global finance, with Bitcoin potentially soaring to all-time highs of $200 000 by the end of 2025, we predict.

“The endorsement of these assets at the highest level of US policymaking signifies that crypto is not just here to stay—it will be integrated into the national financial strategy of the world’s largest and most influential economy. It’s a clear indicator that digital assets will play a defining role in the future of money.”

By formalizing a digital reserve, Green said Washington was securing a hedge against inflation, strengthening economic sovereignty, and promoting innovation in blockchain technology.

He said this strategic decision places the US ahead of global rivals in digital asset adoption, likely forcing other economic powerhouses to follow suit or risk losing ground.

“The formal recognition of Bitcoin and other cryptocurrencies as part of a national reserve is a defining moment. We expect this move to accelerate mainstream adoption, attracting new investors and reinforcing Bitcoin’s role as a store of value,” Green said.

“The US economy stands to benefit enormously, as it secures a position at the forefront of the new financial era, creating jobs and driving growth in blockchain innovation.”

BUSINESS REPORT