South Africa's crackdown on cryptocurrency crimes
In the dynamic world of cryptocurrency, two African countries, South Africa and Kenya, are making significant strides in regulating their respective crypto scenes and leveraging blockchain technology for innovation.
Kenya's Regulatory Push
In Kenya, the National Treasury has handed lawmakers the Virtual Assets Service Providers (VASP) Bill 2025. This bill aims to regulate the country's crypto scene by bringing VASPs under the oversight of the Kenyan Capital Markets Association and the Central Bank of Kenya.
South Africa's Regulatory Framework
South Africa, on the other hand, is expected to comply with anti-money laundering (AML) and counter-terrorist financing (CFT) measures aligned with international standards such as those set by the Financial Action Task Force (FATF). Virtual asset service providers (VASPs) are required to register or obtain licenses, conduct customer due diligence, and cooperate with authorities in enforcing AML/CFT controls.
The FATF’s "Travel Rule," which mandates sharing originator and beneficiary information in virtual asset transfers to mitigate illicit activity, is also being implemented. While South Africa has been progressing in developing its regulatory framework, significant challenges remain in supervision, risk assessment, and identifying entities conducting VASP activities.
Innovation in South Africa
Innovation in South Africa is not limited to regulation. Nedbank, a traditional South African finance institution, plans to debut smart contract applications within the next 6 to 12 months to demonstrate its blockchain capabilities. The bank also aims to deploy smart contract technology for automating agricultural operations and streamlining credit financing processes.
First National Bank is developing a system for digital title deeds, while Absa CIB has already implemented blockchain for digitizing letters of credit. Bybit Academy via AltSchool Africa is accepting sign-ups, and Mento Labs's Global Stablecoin Hackathon is open till May 2 for registrations.
The Fight Against Crypto-Related Criminal Activities
However, the Financial Intelligence Center (FIC) has issued a warning to VASPs about tightening controls against crypto-related criminal activities. The FIC is concerned about transactions using anonymous accounts, wallets linked to multiple payment cards, sudden large deposits, quick bouncing between different crypto types, and funds coming from mixing services that obfuscate transaction trails.
The FIC's report, released on April 1, indicated that criminals are becoming more sophisticated in laundering money through crypto, and many exchanges lack the necessary measures to detect such activities. The FIC identified nine crypto platforms with suspicious activities, including financing terrorism and child abuse material on the dark web.
South Africa-Specific Regulations and Global Influence
Although direct South African-specific regulatory texts are not detailed in the available sources, the country follows global FATF recommendations, which influence local policies and regulatory developments. These include licensing or registration of VASPs, mandatory collection of transaction information per the Travel Rule, and adherence to AML/CFT legislation aimed at preventing the abuse of virtual assets for illicit finance.
The Need for Strong KYC Procedures
In response to these concerns, the FIC advises crypto exchanges to implement strong Know Your Customer (KYC) procedures and better match transactions to the actual identities of the initiators. Mariblock, a company, received grants from HRF and donations from Ripple in Q1 2025.
Kenya's Regulatory Bill
The bill requires crypto exchanges to obtain licenses, open physical offices, implement anti-money laundering checks, collect user information, and share it with authorities when necessary. CNGN's developers are seeking listing on Yellow Card and Roqqu.
In conclusion, both South Africa and Kenya are taking proactive steps towards regulating their crypto scenes and leveraging blockchain technology for innovation. While challenges remain, both countries are committed to combating crypto-related criminal activities and aligning with evolving international AML standards for virtual asset service providers.
[1] FATF 2025 targeted update report [4] South Africa’s alignment with evolving international AML standards for virtual asset service providers
- The regulatory push in Kenya is evident with the submission of the Virtual Assets Service Providers (VASP) Bill 2025 to the National Treasury, aiming to regulate the crypto scene.
- The Kenyan Capital Markets Association and the Central Bank of Kenya will oversee VASPs once the bill is enacted.
- South Africa is set to adopt anti-money laundering (AML) and counter-terrorist financing (CFT) measures in alignment with global standards such as those set by the Financial Action Task Force (FATF).
- Virtual asset service providers (VASPs) in South Africa are required to register or acquire licenses, conduct customer due diligence, and cooperate with authorities in enforcing AML/CFT controls.
- As part of the "Travel Rule," originator and beneficiary information will be shared in virtual asset transfers to mitigate illicit activity in South Africa.
- Despite progress, South Africa faces challenges in supervision, risk assessment, and identifying entities conducting VASP activities.
- Innovation in South Africa extends beyond regulation as traditional finance institutions like Nedbank plan to deploy smart contract applications and tools for agricultural operations and credit financing.
- The Financial Intelligence Center (FIC) is calling for tighter controls against crypto-related criminal activities, such as suspicious transactions using anonymous accounts or mixing services.
- South Africa follows global FATF recommendations, influencing local policies and regulatory developments, including the licensing or registration of VASPs, implementation of the Travel Rule, and adherence to AML/CFT legislation.
- In response to concerns over crypto-related crimes, the FIC encourages crypto exchanges to implement strong Know Your Customer (KYC) procedures and better match transactions to users' identities.
