As government pushes ahead with plans to regulate cross-border crypto-currency flows, two High Court judgements have reached opposing conclusions on whether digital assets already fall within South Africa’s existing exchange control framework – leaving crypto holders in limbo.
The conflict centres on two cases involving the South African Reserve Bank (SARB). In the Pretoria High Court, Judge Mandlenkosi Motha found that crypto-currency was not subject to South Africa’s existing foreign exchange regulations.
But in a later judgement from the Johannesburg High Court, Judge Stuart Wilson expressly departed from that finding, ruling that Bitcoin constitutes capital under the country’s exchange control framework and can be subject to forfeiture for regulatory breaches.
Apartheid law
In the 2025 Pretoria case, Standard Bank took SARB to court, arguing that the central bank could not lawfully confiscate digital funds it held as collateral for a R40 million overdraft it granted to Leo Cash and Carry.
Finding in favour of Standard Bank, the judge says the foreign exchange regulations, which were introduced in 1961, had no bearing on modern-day transactions in digital currencies. Motha explains that the law was apartheid-based and introduced to stem a run on the rand following the massacre of at least 69 black people in Sharpeville.
That matter is due to be heard by the Supreme Court of Appeal this year.
However, another judge has held that the “contrary decision in Standard Bank of South Africa v South African Reserve Bank is clearly wrong”. In the Square Mangundhla vs SARB matter, the judge ruled that Bitcoin is both money and capital that is regulated under forex regulations.
Law firm Bowmans explains that Wilson determined that transferring Bitcoin externally requires National Treasury approval for amounts above R1 million a year – just like any other international transaction.
“In doing so, the court expressly declined to follow an earlier decision of the same division, Standard Bank of South Africa v South African Reserve Bank, holding it to be ‘clearly wrong’,” says Bowmans.
In the Johannesburg case, Square Mangundhla and Fungai Dangaiso took SARB, its deputy governors and finance minister Enoch Godongwana to court to overturn a forfeiture order after the central bank seized nearly R6 million in crypto-currency assets and funds linked to Bitcoin transfers to foreign exchanges.
Dodgy dealings?
The case involved Mangundhla using his own and another person's Luno accounts to circumvent trading limits and move about 1 680 Bitcoin, worth nearly R182 million, to foreign crypto-currency exchanges between 2018 and 2020.
SARB argues that Mangundhla had effectively exported capital from South Africa without National Treasury approval as required under the Exchange Control Regulations of 1961, issued in terms of the Currency and Exchanges Act of 1933.
Wilson says the central question was whether Bitcoin constitutes either “money” or “capital” under the exchange control framework.
“I conclude that it is both. This conclusion arises not only from the plaintext meaning of the regulations themselves. It is reinforced by any reasonable purposive interpretation of those regulations,” Wilson writes.
Who knows?
Bowmans says there is a significant practical consequence. “Capital cannot lawfully be moved offshore through crypto-currency without [National] Treasury approval, and crypto assets are themselves liable to forfeiture for exchange-control breaches.”
In concurrence is law firm ENS, which explains that “for the crypto industry and its advisers, the implications are serious. The judgement suggests that, even though exchange control laws were written long before crypto-currency existed, courts may still apply them to digital assets that behave like traditional forms of capital.”
Moonstone Compliance and Risk Management, however, says the latest ruling muddies the water. It notes there are now two contradictory High Court judgements on whether crypto-currency is “money” or “capital” in terms of forex regulations, which adds “another layer of uncertainty to the regulation of cross-border transactions involving crypto assets”.
Stronger case
ENS says the Johannesburg judgement “also strengthens the policy direction already visible in Treasury’s Draft Regulations, which seek expressly to bring crypto assets within the exchange control framework”.
National Treasury recently proposed sweeping new controls on the use and movement of crypto assets, limiting how South Africans can buy, sell, lend and transfer digital currencies, particularly across borders.
The proposed Draft Capital Flow Management Regulations will replace the 1961 Exchange Control Regulations and bring crypto assets formally within South Africa’s capital flow management framework.
The draft regulations would replace the current pre-approval system with a risk-based approach focused on reporting, monitoring high-risk cross-border transactions and combating illicit financial flows.
Revamping vintage rules
Crypto-currency exchange VALR says the aim is to modernise oversight of cross-border flows, close gaps involving crypto transactions and strengthen reporting requirements.
Bowmans notes the proposals are intended to align South Africa’s foreign exchange regime with standards set by the Organisation for Economic Co-operation and Development and the Financial Action Task Force to combat money-laundering, terrorist financing and illicit financial flows.
Under the proposals, anyone seeking to transact above prescribed thresholds would have to apply through an authorised provider and disclose detailed information about the purpose of the transaction.
Non-compliance could result in fines of up to R1 million, imprisonment of up to five years, or both. Authorities would also be able to compel individuals to provide passwords, PINs or access codes to access and dispose of lawfully seized crypto assets.
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