South African Stablecoin Landscape
- Paul Mitchell
- 22 hours ago
- 18 min read
Summary
Stablecoins are a very significant topic in financial services globally, and South Africa is no exception. By my count, there are ten ZAR stablecoins. This includes one that is backed by crypto assets (ZARm), and one that is interest bearing (eZAR); neither would qualify as a stablecoin under most regulations. The ten coins fit into four overlapping business models, which are patterns that can be seen in US dollar stablecoins as well. There are 1 or 2 clear leaders in SA in each type. The four types are:
1. DeFi stablecoins, designed for permissionless innovation;
2. Stablecoin ecosystems, enabling partners to easily incorporate stablecoins;
3. Platform stablecoins, designed mainly to solve a problem in a specific context;
4. Exchange stablecoins, built for use in a specific trading environment.
It is an imperfect model, but these patterns provide some guide as to the individual and collective future of stablecoins in South Africa. Economic models of stablecoin types differ, and impact adoption models in ways that are sometimes hard to predict. The best of these stablecoins are making sensible assumptions about regulations, and thereby providing high quality assets that partners and customers can trust. Specific stablecoin regulation in SA would, however make a huge difference to this market, and bring benefits for the whole economy. This article covers many of these topics at a high level, and if there is interest I may go into details in future. In the meantime, the table below summarise the position at the end of February 2026.
Why we need ZAR stablecoins
Almost everything you read about stablecoins is about the US dollar ones: USDC, Tether, and a fast growing pack of alternatives. So why worry about rand denominated coins? You can get all the utility, and far deeper liquidity, from dollar stablecoins, but the snag is that you have to then work in dollars. From a user perspective, unless a currency hedge is what you are looking for, that creates an FX risk and price volatility. Hence the user demand for ZAR stablecoins.
So from a collective, national, perspective, we need rand stablecoins as a counter to the utility aspect of dollar stablecoin adoption. The attractiveness of dollar stablecoins as a currency hedge does not go away – the threat of dollarisation by stablecoin. This would lead to a weakening of monetary control, and perpetuate dollar hegemony. This last point is important: in an increasingly unpredictable global political climate, many countries are looking for solutions that reduce or remove dependency on the US financial system. Russia and Iran have been building around sanctions for a while, but even the UK is openly seeking to reduce its exposure to US financial influence – witness the recent quest for Mastercard and Visa alternatives. And South Africa, aligned with BRICS, would also benefit from options. Thus rand stablecoins should be something we are working on in parallel with other initiatives.
But from a more positive perspective, we need stablecoins, and other tokenised money, because financial services is tokenising. You don’t have to take my word for this – the CEOs of BlackRock, JP Morgan, Citi and others are saying so publicly. In the near future increasing types and volumes of financial assets will be represented as tokens, and so to get the full benefits of transacting in these assets, we will need tokenised money. Asset managers are likely to drive the next wave of adoption of blockchains.
Fortunately, in terms of blockchain tech, we punch above our weight in South Africa, where we have a strong community of innovators. Thus – despite the many challenges – we have a vibrant stablecoin industry in SA.
The stablecoin landscape
I am aware of ten ZAR stablecoins currently in issue, with varying degrees of sophistication, scale, and quality. The most interesting lens to view them through, however, is business model. Since USD stablecoins provide the biggest sample set, it makes sense to look at those for examples that might help us in understanding the SA market and its possible direction. Emerging from this study are four business models, with a fifth related category that I will get to later. These models overlap, but I think they provide an indication of the approach that stablecoin issuers are taking. Each model has a current clear leader (or two, in one case) in the SA market, although things change quickly in this field.
Type 1: DeFi stablecoins
First are the original “pure” stablecoins, starting with USDT (Tether) and USDC (from Circle). The original model was to bring dollar pegged assets into crypto, initially as a place to park capital between crypto trades. These stablecoins have the largest scale: currently USDT is at $185 billion and USDC at $74 billion in market cap. That scale brings liquidity, and along with their permissionless nature makes them a useful tool for innovators to build on. USDT and USDC are therefore the basis of many projects in DeFi (decentralised finance), and the obvious option when you need to include dollars in your project.
In South Africa, the closest equivalent to these is ZARP, from Inves Capital. ZARP is on four blockchains, supporting utility across all of those environments; it needs to be where builders are building. ZARP partners with, and is backed by funds managed by, Old Mutual Wealth. The team behind ZARP is well funded and has a strong track record in fintech. ZARP is being used by several projects who have incorporated it as the rand money in their wallet or payments ecosystem. You can find these on ZARP’s website, which also includes transparency on their reserves, and links to their contracts on the blockchains they use. These blockchains are all public and permissionless, so transaction data, circulating supply and holders are all viewable. These data show R67 million supply and about 700 holders. Note that there are many more actual users than this, since a single exchange address links to many users.
The other ZAR stablecoin in this category is xZAR, from AltCoinTrader. This is on three blockchains, but is notably less detailed in its transparency, and does not seem to be widely incorporated into other projects. The on-chain total supply is over R10 billion, making it the standout on this metric, but this is not verifiable by any recent attestation – the most recent on their website being in 2021. Note that most of the on-chain metrics of stablecoins are gameable, making this analysis an indicative exercise rather than a definitive one. This R10 billion figure may include burned or uncirculated coins, and transaction volumes for xZAR are very low.
The future development of this model is perhaps indicated by Circle. Growth and adoption comes from utility, and so the easier it is for others to build on top of the stablecoin, the more it will be used, and the more it will grow. In Circle’s case, they have invested in things like the Cross Chain Transfer Protocol, making it easier to move USDC between more than 30 blockchains. Then there is Arc, which is their own blockchain, optimised for stablecoins; the Circle Payments Network provides payment infrastructure for USDC; StableFX is an onchain foreign exchange mechanism to swap between USDC and other stablecoins. Perhaps most interestingly, Circle have built infrastructure designed to be used by (often AI driven) agents making micro transactions. As ZARP adoption grows, the Circle playbook is a guide to where they might go, but an imperfect one. The environment that ZARP exists in is different from Circle’s, and ZARP is at a different stage in its trajectory, a different economy, and with stablecoins in a different place than when Circle was at the same stage. The clues to ZARP’s future are in the growing ecosystem of partners and business models that are building on top of it.
Type 2: Stablecoin ecosystems
As I wrote before, the stablecoin model is being unbundled into its constituent parts in response to new opportunities. In a gold rush, it is good to be in the picks & shovels business. The best dollar examples of this are probably Bridge and M0, who abstract most of the complexity of creating a stablecoin for their clients. In this model, the tools for creating stablecoins become widely available, and if you bring your brand and customers, then these businesses will build you a stablecoin. The benefit is that at an underlying level, the stablecoins built on the same foundations are fungible, and so liquidity is pooled, and solutions built for one should work for all of them. Importantly, the yield generated by collateral assets is passed mainly to the partner rather than being retained by the issuer; for the issuer, scale is the key. With this model, Bridge have partnered with Payoneer, Bitso, Metamask and others. PayPal recently moved their stablecoin, PYUSD to this kind of model, using it as the collateral for the branded stablecoins of other businesses.
The only model anything like this in SA is eZAR, from Block Markets Africa. The eZAR initially emerged from the follow up work to Project Khokha 2, known as PK2.x, where it began as a “multi issuer stablecoin”: the structure allowed for the same model to be incorporated by many parties, such as PSPs, retailers, or affinity groups. Collateral for eZAR is managed by Ninety One Asset Management, and the issuing model includes RainFin as the General Partner in the issuing partnership. In South African stablecoins, eZAR is unusual in that it is built on a permissioned blockchain. This provides a level of control and privacy that may suit some partners, or perhaps regulators.
Bridge was acquired by Stripe for $1.1 billion about a year ago. Along with other acquisitions and new services, this formed part of a process of Stripe building financial capabilities around stablecoins. This extends well beyond providing their customers with the ability to accept payment in USDC. Stripe recognises the opportunity to build financial services on stablecoin rails, and is providing stablecoin accounts to customers. From one angle, it is more like neobanking, based on the capabilities of tokenised money.
Viewed through this neobanking lens, the eZAR – which unlike other stablecoins here is an interest bearing instrument – may make more sense. It provides tokenised access to liquid interest bearing assets. As such it would not be regarded as a stablecoin under published regulations in most parts of the world, which prohibit payment stablecoins from offering yield. This may offer guidance as to the future of eZAR, as explored in its work with FINASA. This project was described as an “industry stablecoin interoperability programme”- positioning eZAR as the basis for an ecosystem rather than as a standalone product. This set of tools could be used as a framework for building tokenised financial services on top of; by retailers to create their own money in their loyalty ecosystem, by PSPs to build services around programmable money, or by banks to create a shared stablecoin (cf. Qivalis in Europe). The biggest challenge is perhaps educational – these potential partners are not crypto native, and so they need first to understand what is possible, then work through the long process from concept to product. Looking at Bridge, and their acquisition by Stripe, it may even be that someone sees the benefits of integrating these capabilities to a bigger payment business, but there are not many Stripes around.
Type 3: Platform stablecoins
Platform stablecoins are designed with the needs of a specific system in mind. While they can be used more widely, that is not the primary or initial goal. This distinguishes them from type 1, permissionless stablecoins, but there is an obvious overlap with type 2 in that a proprietary branded stablecoin could be built on top of a stablecoin ecosystem. Global examples of platform stablecoins include PayPal’s PYUSD, and Western Union’s USDPT. In each of these cases, the business has decided to create their own internal money for three main reasons: cost, instant settlement, and programmability. By incorporating a stablecoin, they can do stablecoin things, and they benefit from the economics of adoption by their existing customer base, whether it is for payments (PayPal), or remittance (Western Union).
The best ZAR example in this category is Supercoin (ZARSC), from the Supergroup, owners of BetWay. ZARSC enables users to make payments without incurring bank fees, and gives them a stable form of value that helps strategically by keeping customers inside their ecosystem. Building out extra functionality supports this, so adding services like airtime purchase with ZARSC makes sense, and merchants who adopt would benefit from low or no transaction fees. ZARSC is also listed on Luno, further blurring the edges of the model. ZARSC is transparent, audited by Moore, with its collateral in an account at Absa, and with about R4 million in circulation on Solana across about 100 holders. Note that, like ZARP, this number of holders is significantly understated because it counts those who hold it via the Luno exchange as a single holder.
Other stablecoins in type 3 include:
ZARm from Mento is the ZAR stablecoin, used most notably by Mint Money, formerly Opera Pay, used for remittance and payments across Africa. It arguably does not belong on this list since it is crypto rather than fiat currency backed, but it does have real utility and high transaction volume. It is all on chain (Celo), with about R230,000 in circulation across more than 100 users. Mento stablecoins collectively are over-collateralised by 1.36x.
ZARZ is a rand stablecoin in Zeam, an “interoperable global business wallet”. Information from Stellar suggests about R5m in circulation and about 27,500 holders. Attestation links on the website are mostly dead, but one leads to recent attestations, and notes a “trust account” as collateral. Transaction volumes are fairly high.
ZARC comes from TD Markets Exchange, with about R1m on Stellar and 3 holders, with no attestation apparent, and no transaction volume.
The motivation behind platform stablecoins is to provide rand access within a specific use case. The permissionless nature of stablecoins on public blockchains can then enable them to be used outside that system, as is the case with ZARSC on Luno. If many BetWay customers hold ZARSC and want to spend it, then other partners and merchants could integrate it to access that spending power and the low acceptance cost, and potentially it starts to form the basis of payment systems.
Collectively, the challenge with this category of stablecoin is that there are potentially so many of them. DeFi Llama lists 55 US dollar backed coins, and many more have been announced. Whether we end up with a few, through network effects, or whether they disappear into the financial infrastructure is up for debate. My view is the latter: the technology will take care of switching from one to the other, and we will hold whatever stablecoin makes sense in a given context. The obvious analogy is bank money. My account is a liability of Absa, but I don’t care if you pay me from Standard Bank or Capitec; it winds up as Absa money in my app. The underlying infrastructure hides the wiring of the conversions to Absa money. A clearing house entity like PayInc has a role to play in enabling this interoperability, and ensuring the singleness of different forms of the rand. This (full disclosure) is the focus of my current work with PayInc.
Type 4: Exchange stablecoins
This category is really a subset of type 3, in that a digital asset platform is a specific type of ecosystem in which a stablecoin exists. The best example globally is probably FIDD from Fidelity, who are planning to launch their stablecoin on their own digital asset platform. The idea of this kind of platform is that it provides the ability to trade anything in tokenised form. This concept of an “everything exchange” is probably exemplified by Coinbase, who mainly use USDC for money in their system. Fidelity, building for their many existing customers, have decided to capture the economics of the stablecoin for themselves.
In South Africa there are two good examples of this type of coin. The first, mZAR, comes from Mesh, who are building a tokenised exchange, listing – so far – a handful of real world assets. They started with the type of private asset that would have previously been hard to access, and have recently gone more mainstream, listing an Old Mutual money market fund. In this system, rands are represented by, and funds denominated in, mZAR. If you want a yield bearing version, then sister coin yZAR provides that option. The collateral for mZAR is held by Mesh Mint, a bankruptcy remote SPV, in an account with Investec, and it is transparent, with over 400 holders and about R4 million in circulation on Stellar. There are plans to expand to Solana as well for enhanced access, liquidity and interoperability.
The second exchange stablecoin is ZARU, announced recently by Luno, in partnership with Sanlam, Standard Bank, Easy Equities and Lesaka. This is being made available initially to institutional users of Luno and Easy Equities, but may become available to retail users over time. Similarly to mZAR, ZARU is how you can hold tokenised rand in the exchange. It is built on Solana with a total supply of about R10 million.
ZARU is probably the example that most stretches the slightly contrived nature of my "stablecoin types" model. It has only recently launched, and has not yet gone live with any use cases, so "exchange stablecoin" is where it is at the moment. Looking at the partners, there are obvious applications for Luno in payments with Lesaka, and in foreign exchange via its relationship with Circle and StableFX. Adding all this up, plus the speculation below, and it can be seen as a genuine financial infrastructure play.
One other entrant in this category is CZAR, from crypto exchange ChainEX. I don’t know much about this one, had not heard of ChainEX until I started the exercise, and it is fairly opaque, without attestation. Data on the Binance Smart Chain indicates R600,000 total supply and 27 holders, but no transactions in the last six months.
The future of Exchange stablecoins mirrors that of ecosystem coins, in that it makes sense for any exchange (Valr is the obvious next example in SA) to have their own coin. Focusing on institutions, as ZARU is doing, gives a clear route to institutional adoption. If you project the institutional exchange future of ZARU – and this is pure speculation on my part – then you can imagine Easy Equities tokenising all of the traditional assets they have and listing them on Luno. Luno then becomes an “everything exchange”, and institutional customers can trade crypto alongside local and global shares and other assets. Over time, you might expect that the banks want to introduce their own money to this system in the form of deposit tokens, for their customers. You might also expect Valr to compete in the same field, and the JSE to play catch up from a tokenisation perspective. This gives the regulators some work to do as well: not only with the long promised stablecoin regulation, but with regulation of this type of exchange to ensure a level playing field between Luno and the JSE. More on stablecoin regulation below.
A related category: deposit tokens
Deposit tokens are not stablecoins: they are tokenised bank deposits. Rather than being backed at least one to one by high quality liquid assets, they are a tokenised representation of the fractional reserve banking model, representing a liability of the issuing bank. Globally, large banks like JP Morgan and Citi are using deposit tokens, and thus enabling their customers to leverage the programmability of money. This only works within the given bank’s customer base, but has advantages at global scale, e.g. the way that Ant Financial use JPM dollars to programme their treasury movements. There is potential for African banks to use deposit tokens in a similar way across African markets, and also to use them for efficiencies in the payment system. So far, however, no SA bank has issued a deposit token or a stablecoin. Absa have been reported as testing a gold backed token for cross border payments, but this is not a stablecoin in the usual sense; its value will fluctuate with the gold price. Their production testing will not start until all the regulators involve are comfortable.
Adoption and payments
Peter Drucker said that the purpose of any business is to create and keep customers. Stablecoins are for holding and moving value on blockchain rails, so the goal of stablecoin issuers is to get customers to do that with their money. Adoption comes mainly from being used in payments, and so the question is how that will happen. For type 1 coins, this process is organic. Looking at ZARP’s ecosystem page gives an indication of how that will happen, as innovators build on ZARP infrastructure. For type 2 and 3, it is about leveraging an existing retail base or ecosystem: providing the money infrastructure that an existing group can use, probably invisibly to that group – it just becomes “money” and not stablecoins. For type 4, the logic is similar, but adoption is mainly corporate. This leads more directly to the “stablecoin as infrastructure” endgame, and is why ZARU in particular is interesting in an SA context, given its partners. Deposit tokens have the obvious benefit of a captive audience of existing bank customers.
The economics of stablecoins
The classic stablecoin economic model that demands attention is Tether: billions of dollars in interest on collateral, with a global headcount in the low three figures. This model will become more expensive with compliance and regulation, but the technology advantage persists. From the perspective of SA coins, there is a similar pattern: issue stablecoins that do not yield interest, and hold the high quality liquid assets that back this digital cash. The income of stablecoin issuers comes mainly from the interest on these collateral HQLAs.
The other aspect to think about is the cost of transactions, and where that goes. In the retail context, the benefit of stablecoins is that transfers are very cheap, especially when compared to the fees for credit cards. In a cross border use case, the gap is much larger. In both cases, however, we need to be careful to compare like with like: stablecoins in a retail context need to be able to do everything that cards can, including disputes and chargebacks; at an institutional level, the discussion moves to liquidity and market depth. Even so, transaction fees are the other key aspect of stablecoin economics. From the perspective of the ecosystem stablecoins, it is about saving those fees; for others, stablecoins provide the opportunity to build things you can charge fees for: new services perhaps, or just lower payment fees, but at scale.
Regulation of stablecoins
Regulation of stablecoins in South Africa currently falls under the regulations relating to crypto assets. All digital or crypto assets are in one regulatory bucket, from Bitcoin to Doge to USDC, and there is a single category of Crypto Asset Service Provider licence. The FSCA has issued about 300 CASP licences up to December 2025. For comparison, the EU had issued 102 up to the same point. Seven of the stablecoin issuers listed here have CASP licences; two have licence processes pending, and one is a decentralised business that would not have applied. There is a mixture of Cat I and Cat I&II licences, covering advice, intermediary services, and investment management. These licences may be necessary for other things that these companies are doing, e.g. operating an exchange, but the issuance of stablecoins should require a distinct licence with more demanding and specific requirements. A CASP licence does not provide all the protection that stablecoin users deserve. This is the regulation that this industry has been expecting for a while.
South Africa’s February 2026 Budget Review includes the following:
“South Africa’s Intergovernmental Fintech Working Group (IFWG) continues its work on an appropriate regulatory framework for stablecoins. The IFWG published the landscape diagnostic study on rand-pegged stablecoins in March 2025. The IFWG’s focus in 2026 will be on assessing (i) whether existing regulatory frameworks apply to rand-pegged stablecoin arrangements and (ii) the policy implications of foreign-currency-pegged stablecoins, with the aim of publishing discussion papers for public consultation in 2026.”
This follows promises of a stablecoins paper from the IFWG in the Budget Reviews of 2022 and 2023; 2024 mentioned an upcoming stablecoin diagnostic, which was published in 2025. The 2025 Budget Review contained an aim “to finalise a set of regulatory recommendations … including a framework for cross-border crypto asset transactions” for public consultation during 2025. We hope for more progress in 2026.
The immediate challenge for regulators, perhaps “assessing … existing regulatory frameworks” lies with e-money. Under the proposed e-money regulations, an e-money issuer can hold funds in a bank account and issue e-money backed by those. If that e-money issuer uses a blockchain to track who owns what, does it become a stablecoin issuer? Could a stablecoin issuer who holds all their collateral in a bank account (e.g. ZARSC) register as an e-money issuer? ENS commented on this in November. E-money is an obvious way for stablecoins into regulation – one that the EU recognised with E-Money Tokens, which is how they describe stablecoins under MiCA regulations.
In the meantime, the best of the ZAR stablecoin issuers are working on the basis of sound financial practice, and using emerging global consensus on stablecoin regulation as a guide. This is critical for customer protection, and clarity on where the counterparty risks lie, what redemption rights are, and how liquidity is ensured. Thus the good ones have transparency on collateral, regular audits or attestations, well managed collateral with reputable partners, and so on – as noted above. But there is still too much grey area around the things that stablecoins are being used for. This hinders beneficial innovation, creates regulatory arbitrage between building on stablecoins and on other forms of money, and deters investment. It holds South Africa back.
A recent study in Australia estimates that “around $24 billion per year [US$17 billion] in economic gains (approximately 1% of Australia’s GDP) could be generated for Australia through Digital Finance innovation that enables Better Markets, Better Payments and Better Assets, three core functions of the financial system”. For comparison, one percent of SA GDP is about R19 billion. The report further notes: “While our advanced payment infrastructure and mature financial markets provide a natural head start and mean we are well placed to capitalise on Digital Finance applications reaching scale overseas, the window to capture a competitive advantage is narrowing.” This description of the situation could equally be applied to South Africa.
The future
The big thing on the wish list of everyone working in this space is regulatory clarity. In the meantime, the innovators continue to build, while incumbent FS businesses are gradually testing the water. The asset management industry is starting to engage more, and I believe that this will accelerate; there is a larger jump in utility from tokenising assets than there is from tokenising money, and so this aspect can be expected to drive progress. The work that Old Mutual, Ninety One and Sanlam are doing with stablecoin issuers is the first indication of this.
All models are wrong, and these four types are no different. These stablecoins will evolve in different ways as adoption increases and they work with current and new partners to improve financial services. The patterns do, I hope, offer some routes into thinking about where stablecoins are now, and where they might be going. There is a lot more to come, and stablecoin issuers should be celebrated for the hard work they have done in SA.
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Note that this space evolves quickly, and while the above is accurate to the best of my knowledge at publication date, it may contain errors or omissions. If you have comments or corrections, please get in touch and I will make corrections of fact as appropriate. Please do not make any financial or investment decisions based on this material, and do not reuse this work without crediting the source.
Disclosure: I have worked with Block Markets Africa (eZAR), and I have engaged extensively with the teams behind the main stablecoins in South Africa.
Thank you to Warren Ross, Simon Dingle, Tobie van der Spuy, Connie Bloem, Vighnesh Patel, and Rob Downes for reviewing early versions of this article and filling in some gaps for me. Please accept my apologies where I have ignored your advice!
