Crypto-currency exchange Luno is arguing that National Treasury’s bid to bring digital currency under a 65-year-old forex regime is unconstitutional and contradicts the South African Reserve Bank’s own stance on the future role of stablecoins in payments.
In a statement noting it has formally submitted comments to National Treasury on the Draft Capital Flow Management Regulations, the company, which is also a digital wallet platform, argues that the change in the law should have gone through Parliament and not be done via a ministerial regulation.
National Treasury’s draft regulations seek to replace SA’s long-standing pre-approval exchange control regime with a risk-based system focused on reporting and monitoring high-risk cross-border transactions and combating illicit financial flows. Breaches could result in fines of up to R1 million, imprisonment of up to five years, or both.
Luno Africa general manager Marius Reitz says that, while crypto asset platforms need legal certainty over cross-border transactions, the company urges “such significant changes [to] be made through a thorough parliamentary process, the need for which is even more acute given that the proposed regulations will affect the fundamental property and privacy rights of millions of people”.
Hands off
The draft regulations could strip South Africans of fundamental property rights, raising serious constitutional concerns and potentially resulting in people losing assets and businesses folding, says Luno.
National Treasury could use the proposed forfeiture machinery against anyone suspected of breaching the regulations, attaching crypto assets on reasonable suspicion and ordering their forfeiture to the state without first obtaining a court order, the exchange says.
It could also force owners to sell privately held crypto assets at a price it determines – which Luno argues “amounts to expropriation and an unconstitutional intrusion on private property rights”.
Crypto asset service providers could also lose their licences for administrative non-compliance, potentially turning a technical reporting error into a business-ending sanction, says Luno.
Own goal
National Treasury is also contradicting its own policies, published by SARB in its February National Payment System Vision 2030+ Consultation Paper, Luno argues.
In the paper, SARB identifies diversified money and the rise of private, digital and tokenised forms of money as a long-term trend that SA’s payments system will need to manage.
SARB sees stablecoins as potential money rather than merely speculative crypto assets, saying they could be used to pay, hold value and price goods and services, and were “at the centre of payments innovation” in 2025. The central bank says their appeal lies in enabling “instantaneous, low-cost transfers of value” without multiple intermediaries and “irrespective of national borders”.
Yet the proposed regulations would curb the domestic use of globally redeemable stablecoins, which Luno says directly clashes with SARB’s vision. The regulations also place Bitcoin, stablecoins and tokenised real-world assets under the same exchange control framework.
“By failing to distinguish between assets according to their purpose and economic function, Treasury risks unintentionally restricting South Africa’s broader blockchain technology sector,” Luno says.
Skipping Parliament
“Regulatory changes of this magnitude – overhauling a 65-year-old exchange control framework and profoundly impacting the privacy rights of millions of South Africans – should, in our view, have been enacted as a new Act passed through Parliament,” says Luno.
By proceeding instead through ministerial regulation, “the executive branch effectively bypasses the democratic process for changes that will affect the fundamental property and privacy rights of millions of South Africans,” says Reitz.
Luno has long argued locally held crypto assets should be designated as onshore assets, supporting industry growth, job creation and increased tax revenue. Exchange control should apply only to assets leaving the country, it says.
Two judges, zero clarity
The proposed changes come amid conflicting High Court judgements on whether digital assets already fall under SA’s exchange control regime, leaving crypto-holders in legal limbo.
In a 2025 Pretoria High Court, Judge Mandlenkosi Motha found crypto-currency was not subject to existing foreign exchange regulations.
However, Johannesburg High Court Judge Stuart Wilson in June 2026 expressly departed from that finding, ruling Bitcoin constitutes capital under the exchange control framework and may be forfeited for regulatory breaches.
“South Africa needs a regulatory framework that protects the integrity of the digital asset system without stifling the innovation, investment and economic growth that the digital asset sector is uniquely positioned to deliver,” says Reitz.
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