New proposed rules for cross-border crypto transactions add another reporting layer to already overburdened crypto exchanges and could drive legitimate business offshore while undermining the very surveillance the authorities are trying to achieve.

The proposals have been roundly condemned by several industry participants, particularly the requirement to report any transfer of crypto from a local exchange to a private self-custody wallet.

Many in the crypto community have long argued for self-custody as a more secure way to protect against potential hacks and confiscation by the state.

The draft Crypto Asset Manual for cross-border activities, recently published for comment by National Treasury and the…