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South African pension funds are to be banned from investing in cryptocurrencies under new draft rules.

• “A fund may not invest in crypto-assets directly or indirectly,” the proposed rule change states in the Government Gazette published Friday.
• This would replace existing legislation that allowed portfolio managers to invest as much as 2.5% of funds in crypto as part of an umbrella “other assets” category.
• The South African government defines a crypto asset as any digital representation of value “not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility; applies cryptographic techniques and uses distributed ledger technology.”
• Such a broad definition points toward the ban extending to non-fungible tokens (NFTs) and similar tradeable digital assets.
• Financial regulators in South Africa have in recent months indicated there would an acceleration in crypto regulation in response to retail investors being scammed by fraudulent investment firms.

Read more: South Africa’s Financial Watchdog to Bring Crypto Exchanges Into Regulatory Oversight