As a trustee, you know that your retirement fund is not allowed to invest in cryptocurrencies. But the world of digital finance is much larger than just cryptocurrencies.
Trustees should not confuse “cryptocurrency” with “crypto assets”. Cryptocurrency is just one type of crypto asset, not the whole category. A crypto asset is any digital item of value that uses cryptography and blockchain technology to be created, stored, or transferred.
Bitcoin and other cryptocurrencies are the best-known examples, but there are others trustees should be aware of:
Stablecoins
These are designed to hold a steady value by being linked to something else, usually a currency (like the US dollar or South African rand), but sometimes a commodity like gold.
Security tokens
They represent a stake in a real-world asset, such as a share in a company or a portion of a property. Unlike cryptocurrencies, their value depends on how that underlying asset performs.
Crypto assets have moved from being a suspicious outsider to a noticeable player in the global financial system – being welcomed in some countries more than others. In the United States (US), some large asset managers have invested in cryptocurrencies and in more regulated exchange-traded funds (ETFs) that track crypto assets.
Where South Africa stands
Approaches internationally are evolving. Some retirement and institutional investors in countries such as the US and Japan are exploring regulated exposure to digital assets, while other jurisdictions remain more restrictive. South Africa currently takes a more cautious approach. China also strictly bans retirement funds from investing in crypto assets.
The assets South African retirement funds are allowed to invest in are governed by Regulation 28 of the Pension Funds Act. Regulation 28 prohibits funds from investing in any crypto assets.
The main reason for the prudent approach is that cryptocurrencies are very volatile, which means that their value can go wildly up and down over short periods of time. Retirement savings are meant to grow steadily over decades, and an asset that can lose or gain a large share of its value in days does not fit that mandate.
Unlike shares or bonds, many cryptocurrencies do not generate cash flows such as dividends or interest. This makes traditional valuation approaches difficult to apply and means that prices can be heavily influenced by market demand and sentiment.
On the other hand, the digital financial industry in South Africa has become more sophisticated. Some retailers accept cryptocurrencies and a handful of investment houses offer regulated exposure to international crypto assets. The first rand-backed stablecoin, called Zaru, was launched in February 2026 by a consortium of large financial and crypto platforms.
This illustrates an important distinction for trustees: digital assets can serve very different purposes. Zaru is designed to maintain a stable value relative to the rand and facilitate payments, whereas cryptocurrencies are generally much more volatile.
Let’s look at what trustees should know:
Changes in domestic regulation: The Financial Sector Conduct Authority (FSCA) has begun regulating Crypto Asset Service Providers (CASPs), treating digital assets as financial products under the FAIS Act. Any crypto-related service, such as trading platforms, wallet providers, or investment advisers, must be licensed as a CASP. Despite this, retirement funds are still not allowed to invest in these assets.
Blockchain as infrastructure: Blockchain technology is being explored globally and locally to clear payments, secure data, and track transactions without intermediaries. Many globally respected institutions, such as the International Monetary Fund and the World Bank agree that blockchain has the potential to significantly change parts of the financial system. Trustees should distinguish between crypto assets and the blockchain or distributed-ledger technology that can underpin them.
Spotting indirect exposure: Although Regulation 28 prohibits direct investment in crypto assets, trustees should still consider whether the fund has indirect exposure to the crypto ecosystem through shares, funds or other investments in its portfolio. Funds may have foreign exposure of up to 45%, subject to the applicable Regulation 28 limits and the fund’s investment strategy. If a global tech company, payment processor, or bank held by the fund is heavily exposed to a crypto market crash, trustees need to understand that risk.
Trustees don’t need to become crypto experts. But they should keep an eye on the developments in the broader regulatory framework for digital assets rather than treating the current position as permanent.
This content is for general educational purposes only and does not constitute financial advice. Mentioning any specific company or product is not an endorsement. Trustees should seek appropriate professional or regulatory guidance before making fund-related decisions.
Further reading
Blockchain: the technology that could change the financial world
Sources
Daily Investor: South African pensions could soon be invested in crypto
EBnet: Crypto-Asset Regulation in Retirement Funds
Intergovernmental Fintech Working Group (IFWG): Position Paper on Crypto Assets
Pensions World: Crypto assets and retirement funds: Between caution and conviction
Today’s Trustee: Crypto in your pension fund is a step closer
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All content is for general educational purposes and does not constitute formal financial advice. Always consult a qualified, licensed financial professional before making any financial decisions.