In depth
The question of whether cryptocurrencies fall into the scope of South Africa's currency and exchange control regime has finally been answered.
On 15 May 2025, the Pretoria High Court handed down judgment in Standard Bank of South Africa v South African Reserve Bank and Others (047643/2023) [2025] ZAGPPHC 481 ("Standard Bank v SARB"), ruling that cryptocurrencies do not constitute capital in terms of the Exchange Control Regulations, 1961, and are consequently not subject to South Africa's rigid exchange control framework.
This brings an end to a debate in the South African crypto asset industry as to whether cryptocurrencies require exchange control approval for their export out of South Africa. However, from experience on similar prior judgments on the Exchange Control Regulations, this reprieve may be short lived.
The Exchange Control Regulations
Regulation 10(1)(c) of the Exchange Control Regulations forms the bedrock of South Africa's exchange control framework and provides that no person may enter into a transaction over a certain value where "capital" is directly or indirectly exported from the Republic without the approval of the South African Reserve Bank (SARB). This framework was created in an era dominated by corporeal wealth and traditional currency, and has long been argued to be ill-suited to deal with contemporary challenges, such as those posed by cryptocurrencies. However, the South African exchange control regime is not only archaic – but also exacting, and non-compliance can attract severe penalties imposed by the SARB, ranging from blocking orders to fines of up to 40% of the value of the impugned transaction value, and even criminal sanctions.
Unsurprisingly then, it has been a topic of popular discussion as to whether cryptocurrency constitutes capital in terms of section 10(1)(c), and more particularly whether cryptocurrency can be used as a means to avoid exchange control laws.
Standard Bank v SARB
Standard Bank v SARB concerned a review application in respect of two forfeiture orders imposed by the SARB in terms of the Exchange Control Regulations. These forfeiture orders were the result of an investigation launched by the Financial Surveillance Department of the SARB ("FinSurv") in July 2019, in which FinSurv analysed a multitude of cryptocurrency transactions for alleged exchange control violations.
FinSurv identified a wholesale trading business coordinating several large cryptocurrencies remittances outside of South Africa, primarily in bitcoin (BTC). The Exchange Control Regulations empower SARB to make forfeiture orders where there has been non-compliance with the Exchange Control Regulations. The SARB concluded that these large remittances of BTC constituted the unauthorized export of capital in terms of regulation 10(1)(c) of the Exchange Control Regulations and accordingly imposed forfeiture orders against accounts held by the business and the funds within those accounts, including an account administered and held by the Applicant in the matter.
The Applicant turned to the High Court to review these forfeiture orders, arguing that the SARB was not entitled to exercise its powers in terms of the Exchange Control Regulations, as BTC does not constitute capital in terms of regulation 10(1)(c) of the Exchange Control Regulations.
In considering whether BTC (and cryptocurrencies generally) fall into the ambit of capital for the purposes of regulation 10(1)(c), the Court applied the ruling handed down by the Supreme Court of Appeal (SCA) in Oilwell (Pty) Ltd v Protec International Ltd and Others (2011 (4) SA 394 (SCA).
In Oilwell, the SCA had to determine whether intellectual property fell within the definition of capital for the purposes of the Exchange Control Regulations. In many ways, intellectual property poses a similar risk to exchange controls as cryptocurrencies, in that it can be significantly valuable, but also very easy to transfer and move across borders without touching a bank account or another regulated avenue. In the period leading up to Oilwell, the SARB therefore similarly argued that intellectual property constituted 'capital' under regulation 10(1)(c) and thus fell under its purview. Based on contextual reasoning, the SCA found that the Exchange Control Regulations differentiated between "goods" and "capital", and so capital was not merely synonymous with assets, but rather to specific species of value. On this basis, the SCA held that intellectual property did not constitute capital in terms of the Exchange Control Regulations and consequently fell beyond the scope of exchange control.
Following this approach, the Court in Standard Bank v SARB also declined to widen the ambit of the term "capital" to novel assets such as crypto currencies. The Court further reiterated that empowering legislation that may give rise to a severe impact on a person's rights must be interpreted restrictively. Its reasoning was that, as the Exchange Control Regulations provide a myriad of sanctions that may have a severe impact on a person's rights (such as a forfeiture order), the definition of capital in the Exchange Control Regulations must be interpreted restrictively, so as not to include novel assets such as cryptocurrency. As a result, the Court found that no contravention of regulation 10(1)(c) had occurred, and SARB was not entitled to make any forfeiture orders in terms of the Exchange Control Regulations due to the export of cryptocurrency outside of South Africa.
The Status Quo and Coming Changes
The effect of the ruling in Standard Bank v SARB is that the flow of cryptocurrency outside of South Africa does not fall within the scope of South Africa's austere exchange control framework – at least for now.
In about 15 months after the Oilwell judgment was handed down, the Exchange Control Regulations were amended to explicitly include intellectual property into the definition of capital for the purposes of regulation 10(1)(c), finally bringing the exportation of intellectual property into the SARB's purview. The loophole created by the judgement in Oilwell was thereby rapidly closed.
However, what happened in the year-long period between the Oilwell decision and the amendment of the Exchange Control Regulations was an IP export free-for-all, where IP was readily exported outside of South Africa without any fear of triggering any exchange control implications. It is possible and likely that a similar mass export of currency, through the use of cryptocurrencies such as BTC, stablecoins or others, may occur following the ruling in Standard Bank v SARB, unless the regulators move swiftly to address the gap. Given the risk this presents to the exchange control system as a whole, such legislative action seems inevitable, and it is likely that the Exchange Control Regulations will be amended in short order.
Such a need for these amendments should come as no surprise. In 2021, the Intergovernmental FinTech Working Group (IFWG), in collaboration with a number of South African financial regulators including the SARB, published its Position Paper on Crypto Assets ("IFWG Paper"). One of the recommendations of the IFWG Paper was that the Exchange Control Regulations be amended to include crypto assets into the definition of capital, unequivocally bringing cryptocurrencies into the ambit of South Africa's exchange control regime. The Court in Standard Bank v SARB similarly referred to an earlier academic position paper published by the SARB in 2020 in which the SARB itself stated "Exchange control regulations do not govern the transfer of cryptocurrencies in and out of South Africa. Any cross-border exchange can therefore not be authorised by SARB,", hinting at the need for regulatory reform.
Standard Bank v SARB will certainly hasten this amendment and reform. However, until then, if the experience from Oilwell holds true, an avalanche of cryptocurrency export is imminent.
