The following is an Opinion Piece by Dr Wiehann Olivier, Partner & Head of FinTech and Digital Assets, Forvis Mazars. The views expressed in this piece do not necessarily reflect those of Global Crypto TV.
South Africa stands at a crossroads in the evolution of its financial markets. Crypto assets have moved from fringe curiosity to a mainstream investment option, and licensed local exchanges now offer regulated, increasingly transparent access for retail investors. Yet, our regulatory frameworks have not kept pace with investor demand for efficient, tax-advantaged investment products, especially those available through collective investment schemes (CIS).
Recent progress is undeniable. The Financial Sector Conduct Authority has brought Crypto Asset Service Providers under the Financial Advisory and Intermediary Services Act, introducing much-needed oversight for advice and intermediation. As of September 2025, the Johannesburg Stock Exchange permits the listing of exchange-traded products, such as exchange-traded funds (ETFs) and notes (ETNs) that reference spot cryptocurrencies, subject to robust standards for custody, pricing, and market integrity.
But a critical gap remains: crypto assets are still excluded from South Africa’s CIS framework. For retail investors and platforms, this exclusion creates unnecessary risks, tax inefficiencies, and a persistent incentive to seek offshore solutions, undermining the very protections our regulatory system is designed to provide.
Why CIS Inclusion Matters for Retail Cryptocurrency Investors
The CIS regime is the backbone of South African retail investing. It offers tax neutrality, professional management, and strong investor safeguards. Income distributed within 12 months flows through to investors, and capital gains realised inside a CIS portfolio are disregarded at the fund level, ensuring tax efficiency for long-term investors.
Crypto funds operating outside CIS do not benefit from these rules. Routine buying, selling, or rebalancing of underlying crypto assets can trigger taxable events under ordinary principles, eroding returns compared to a CIS-compliant portfolio with similar activity. For retail platforms, this means clients face higher tax drag and more complexity, while platforms themselves must navigate a patchwork of compliance obligations.
Regulation 28: Pensions Still Locked Out
The exclusion of cryptocurrencies from CIS is compounded by Regulation 28 of the Pension Funds Act, which sets a 0% limit for cryptocurrency exposure. Even after limits were modernised for infrastructure, offshore assets, hedge funds, and private equity, pension funds remain prohibited from investing in crypto assets. This restriction persists despite growing global acceptance, pension funds in the US, UK, and parts of Europe now allow small allocations to crypto-related businesses under strict oversight.
For retail platforms, this means clients saving for retirement are locked out of regulated cryptocurrency exposure, often forced to seek offshore products or unregulated vehicles. The result is capital flight, reduced transparency, and increased risk for South African investors.
Global Peers Are Moving Ahead
Internationally, Canada has offered spot Bitcoin ETFs since 2021, giving retail and retirement funds regulated access. The UK recently lifted its restriction on retail access to crypto exchange-traded notes listed on regulated stock exchanges. In Europe, regulators are debating whether certain unleveraged crypto ETPs can qualify as eligible assets for Undertakings for Collective Investment in Transferable Securities (UCITS) funds, with some jurisdictions already permitting indirect exposure.
South Africa’s recent removal from the Financial Action Take Force (FATF) grey list underscores the country’s commitment to global financial standards and transparency. This milestone strengthens investor confidence and creates an opportunity to modernise domestic frameworks, including how crypto is treated within regulated investment structures.
A Practical Path Forward
A modern framework for including blockchain-based digital assets in the South African CIS sector must balance innovation with investor protection. Eligibility should be limited to digital assets with strong market integrity, deep liquidity, transparent pricing, and proven consensus mechanisms, supported by regulated custody and cold storage to reduce operational and counterparty risk.
Finally, the framework must align with exchange control rules by routing inflows and outflows through authorised dealers and existing allowances. This keeps capital within the regulatory perimeter and reduces arbitrage risk.
Evolving With The Times
The aim is not to endorse cryptocurrencies, but to regulate access. Retail platforms are ready to meet investor demand for digital assets, but they need a regulatory environment that supports innovation, transparency, and investor protection. Including crypto within CIS would keep capital onshore, improve transparency, and ensure investor protections evolve with the times.
South Africa has the opportunity to lead the continent in responsible crypto integration. By modernising our CIS framework, we can empower retail investors, strengthen our financial markets, and reinforce our commitment to global best practice.
