By Jaco Fraser – Associate
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The Standard Bank of South Africa v South African Reserve Bank ruling (the “Ruling”), handed down by the Pretoria High Court (the “Court”) on 15 May 2025, has spotlighted the contentious status of cryptocurrency under South Africa’s exchange control framework. The case, involving a R26 million seizure tied to cross-border Bitcoin transfers by a client of Standard Bank, highlights the clear gap between the South African Reserve Bank’s (“SARB”) enforcement approach and the Court’s interpretation, offering businesses temporary clarity amid uncertainty.
SARB argued that the client’s cryptocurrency transactions violated the Currency and Exchanges Act 34 of 1933 (the “Act”), and specifically the Exchange Control Regulations of 1961 (“Regulations”). SARB’s position is based, inter alia, on the following:
- Violation of Regulation 3(1)(c): SARB contended that transferring Bitcoin to offshore exchanges constituted an unauthorized payment to a non-resident, as it effectively transferred value out of South Africa without Treasury’s approval.
- Breach of Regulation 10(1)(c): SARB viewed crypto as “capital or a right to capital,” arguing that such transactions indirectly exported economic value, requiring SARB authorization to prevent capital flight.
- Broad Interpretation: SARB asserted that “money” and “capital” should encompass cryptocurrencies to align with the Regulations’ intent to curb illicit financial flows, despite their decentralized nature.
The Court, however, rejected SARB’s stance, ruling that cryptocurrencies, like Bitcoin, fall outside of the Regulations’ scope:
- Narrow Definitions: “Money” (coins, banknotes, or traditional instruments) and “capital” (tangible assets like shares) do not include decentralized digital assets, as per the Regulations.
- No Jurisdiction: The Court held that crypto transactions are exempt from exchange control approvals, setting aside SARB’s forfeiture of R16.4 million as unlawful.
- Call for Reform: The Ruling sheds light on a regulatory gap, urging legislative updates to address cryptocurrencies explicitly.
This Ruling enables businesses to engage in crypto transactions without exchange control hurdles, but SARB’s appeal, filed in June 2025, could reverse this. Companies must still comply with anti-money laundering obligations under the Financial Intelligence Centre Act 38 of 2001. As South Africa explores a central bank digital currency, businesses should audit crypto activities and seek legal guidance to navigate this evolving landscape. Embracing the current clarity, while preparing for change, positions companies to lead in the global digital asset market.