Licensed cryptocurrency service providers in South Africa are pressing regulators to amend laws to allow pension funds to invest in crypto assets, mirroring developments in global financial markets. The call to action comes amidst a dramatic surge in the market value of crypto assets, prompting stakeholders to advocate for aligning South Africa’s policies with countries like the US and UK.
Farzam Ehsani, CEO of VALR, highlighted the urgency of the issue, stating on X, formerly Twitter, that it has been two years since South Africa’s National Treasury prohibited pension funds from investing in cryptocurrencies. During this period, the market value of crypto assets has risen by 325%, while Bitcoin alone has recorded a staggering 480% increase in value.
“Let 2025 be the year that Regulation 28 changes to give pension funds the option of including crypto assets. South Africans deserve nothing less,” said Ehsani.
This sentiment is echoed by Marius Reitz, general manager for Africa at Luno, who emphasized the transformative potential of a revised regulatory framework. “The regulatory landscape is an important factor that will continue to shape the future of crypto in SA. While cryptocurrencies are 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,” Reitz said.
Regulation 28 and its Current Scope
Regulation 28 of South Africa’s Pension Funds Act governs the types of assets in which pension funds can invest. Amendments in January 2023 allowed increased exposure to asset classes such as offshore investments (up to 45%), infrastructure (45%), hedge funds (10%), and private equity (15%). However, crypto assets were explicitly excluded, with Treasury citing concerns over their volatility and unregulated nature.
Treasury’s cautious approach was reinforced by recent market fluctuations in cryptocurrencies. Nevertheless, the Financial Sector Conduct Authority (FSCA) has taken steps to regulate the sector, issuing nearly 250 licences to crypto asset service providers to date.
Reitz argues that the sheer size of South Africa’s institutional and pension fund market could lead to a significant demand for cryptocurrencies if Regulation 28 is amended. “Luno’s position as a regulated entity and its custody and liquidity products for institutions give it a strong foundation to support this next phase of crypto’s evolution. The company has built its reputation on operating within a compliant framework and ensuring the security of customers’ crypto assets,” he said.
Broader Support for Regulatory Change
Shiven Moodley, macro strategist at 80Eight, supports the calls for reform. While acknowledging the challenges of establishing the necessary infrastructure for crypto investment, Moodley believes the potential returns justify the effort. “Allocations would be very small because of the drawdown the asset class experiences, but in the grander scheme of things it might just fall under alternatives in the regulator’s eyes,” he explained.
Similarly, Afridax CEO Frank Leonette advocates for the evolution of Regulation 28 to accommodate innovations such as crypto assets and the tokenisation of real-world assets on blockchains. “Many South Africans want to diversify their pension funds and benefit from the incredible performance of Bitcoin and similar crypto assets,” said Leonette.
The push for reform coincides with a growing trend in the US, where retirement funds have embraced Bitcoin exchange-traded funds launched last year. As South Africa’s crypto industry matures under a regulated framework, proponents argue that now is the time for the country to take a bold step toward expanding investment opportunities.
