Luno chief calls for regulatory clarity around bitcoin’s onshore status in South Africa

Paul Harker, Global Head of Legal and Corporate Strategy at Luno, has called on South Africa’s National Treasury to classify bitcoin as an onshore asset when held by local exchanges.

He argues that this move would unlock greater liquidity inflows by making it easier for institutional investors to allocate funds to crypto assets like bitcoin within the country’s financial framework.

The details 

• Harker made these comments on South African television, calling on the country’s National Treasury to provide much-needed clarity around bitcoin’s status as an investment asset in the country. 
• According to him, there are current regulatory restrictions on how much money institutional investors can put into assets classified as offshore or, in bitcoin’s case, not classified at all. 
• He believes the South African government is passing up on opportunities to earn more revenue in taxes from increased investment in bitcoin that the move promises. 
• There is ‘significant capital’ on the sidelines waiting to be pumped into bitcoin, a chunk of which will find its way to government coffers via taxes, Hacker said. 
• He added that Luno has been involved in regulatory conversations with the South African Reserve Bank in the last few years, discussions he claims helped shape the recently enacted crypto regulations in the country. 

Key quote 

• Harker said:

“What we are looking for is clarity from the National Treasury on when [and] under what conditions cryptocurrencies can be considered as an onshore asset.” 

• He added: 

“We have got a lot of institutional asset managers interested in investing in [bitcoin] that are currently held back by the classification if whether it is onshore or offshore.” 

Be Smart 

• Onshore assets in investments are assets held by institutions and individuals that are officially residents in the country that they reside in. These assets are regulated by the laws of the specific country. 
• On the other hand, offshore assets are considered so because they are held and managed by institutions outside the country in question and are, most times, unregulated. 

Zoom in

• In South Africa, a local exchange like Luno is classified as an onshore institution because it is resident in South Africa and governed by regulations in the country. 
• As such, in providing asset management services, the exchange gets regulatory leeway to invest more money in assets classified as onshore rather than offshore in line with regulations in the country. 
• Most assets worldwide are considered onshore, largely because the classification allows for the application of regulations on these assets within the specific jurisdiction. 
• The Organization for Economic Cooperation and Development (OECD) says all offshore assets in the world only constitute less than 2% of all assets invested globally. 
• However, most of the assets classified as offshore are cryptocurrencies, largely because their influence transcends borders and they are not restricted to regulations of any specific jurisdiction. 

Zoom out 

• Crypto regulations are live in South Africa, but clarity on the aspects that the regulations cover is a progressive event. 
• Already, the Financial Sector Conduct Authority (FSCA) responsible for issuing these licenses has okayed the activities of 248 crypto firms as at the start of 2025. 
• However, regulatory clarity on other aspects of the ownership and use of digital assets in the country is an ongoing process across more than one piece of legislation. 
• Luno wants the South African government to bring cryptocurrencies such as bitcoin under its regulatory purview so investors can put more funds in the asset in a structured and regulated environment.