Introduction

In just over a year, South Africa's courts have delivered two fundamentally opposing judgments on one of the most important questions facing the country's digital asset industry: can Bitcoin be treated as "money" or "capital" under South Africa's exchange control framework?

The answer has significant implications for crypto investors, exchanges, financial institutions, and businesses operating across borders. It determines whether the South African Reserve Bank (SARB) can regulate, restrict, and even forfeit assets linked to cross-border cryptocurrency transactions.

With the courts divided and sweeping regulatory reforms already underway, the legal treatment of crypto assets has moved from theoretical debate to practical reality.

The first ruling, handed down on 15 May 2025, concluded that Bitcoin falls outside the scope of South Africa's exchange control regime. The second, delivered on 1 June 2026, reached the opposite conclusion and described the earlier judgment as "clearly wrong".

The result is a period of legal uncertainty that lawmakers and regulators are actively seeking to resolve through significant legislative reform. Draft regulations already published for public comment would fundamentally reshape South Africa's exchange control framework and formally bring crypto assets within the country's capital flow management regime.

This article examines both judgments, the regulatory response from SARB and the Financial Sector Conduct Authority (FSCA), and what the evolving legal framework means for crypto asset holders, service providers, financial institutions, and advisers operating in South Africa.

Why This Matters

South Africa's crypto regulatory landscape is maturing rapidly. What was once considered a largely unregulated environment is increasingly subject to licensing requirements, anti-money laundering obligations, tax reporting standards, and now potentially exchange control restrictions.

The outcome of this debate will influence how crypto assets move across borders, how exchanges operate, how financial institutions assess risk, and how businesses structure digital asset transactions in the years ahead.

Perhaps more importantly, these developments provide insight into the broader regulatory direction being adopted by South African authorities. The question is no longer whether crypto assets should be regulated, but how that regulation will be implemented and enforced.

Background: The Exchange Control Framework

South Africa's exchange control regime traces its origins to the Currency and Exchanges Act 9 of 1933 and the Exchange Control Regulations promulgated in 1961.

The framework was designed to prevent the flight of capital from South Africa, manage foreign currency reserves, and protect the stability of the rand.

The two provisions at the centre of the current legal controversy are:

Regulation 3(1)(c) – which prohibits the purchase, borrowing, or acquisition of foreign currency except through authorised dealers and in accordance with the Regulations.

Regulation 10(1)(c) – which prohibits any person from entering into a transaction whereby "capital or any right to capital is directly or indirectly exported from South Africa" without SARB approval.

Whether Bitcoin and other crypto assets fall within these provisions—as "foreign currency" under Regulation 3 or as "capital" under Regulation 10—is the question that has generated the current judicial conflict.

The Standard Bank Judgment (May 2025): Crypto Falls Outside Exchange Control

Background Facts

The case arose from SARB's Financial Surveillance Department (FinSurv) investigation, initiated in July 2019, into Leo Cash and Carry (Pty) Ltd (LCC), a South African wholesale trading company.

LCC had used South African bank accounts to purchase Bitcoin on local exchanges and transfer approximately 4,405 Bitcoin—worth more than R556 million—to Huobi Global, a Seychelles-based cryptocurrency exchange.

On 22 February 2023, the Deputy Governor of SARB's Prudential Cluster issued a forfeiture order over funds associated with those transactions, including approximately R16.4 million held in LCC's accounts at Standard Bank and a further R10 million held at Nedbank.

Standard Bank, which held a prior pledge and cession over the funds in its possession, challenged the forfeiture.

The Judgment

Judge Motha, sitting in the Gauteng Division of the High Court (Pretoria), ruled in Standard Bank's favour on 15 May 2025.

The court held that:

Crypto Is Not "Currency"

Bitcoin and similar assets are not recognised as legal tender in South Africa, have no central issuing authority, and characterising them as "foreign currency" under Regulation 3(1)(c) would be "strained and impractical".

The court rejected SARB's argument that when rands are used to purchase Bitcoin, the rand effectively becomes cryptocurrency that can then be converted into foreign currency offshore.

Crypto Is Not "Capital"

The court further held that crypto assets do not constitute "capital" as contemplated in Regulation 10(1)(c).

According to the court, the Regulations, drafted in 1961, were never intended to regulate digital assets and could not reasonably be interpreted to do so without stretching the ordinary meaning of the language used.

SARB Acted Ultra Vires

Absent specific statutory provisions regulating crypto assets, the court found that SARB lacked the legal authority to forfeit the R16.4 million pledged to Standard Bank.

Penal Provisions Require Legal Certainty

The court applied the Constitutional Court principle established in Democratic Alliance v ANC, namely that uncertainty in a penalty provision should be interpreted in favour of liberty.

Because exchange control contraventions can result in criminal sanctions and forfeiture, the court found that the Regulations could not be expanded beyond their clear wording.

The judgment was widely viewed as exposing a significant regulatory gap and creating temporary certainty for the crypto industry. However, that certainty proved short-lived. SARB obtained leave to appeal to the Supreme Court of Appeal (SCA), while legislative reform efforts accelerated.

The Mangundhla Judgment (June 2026): A Direct Challenge to Standard Bank

Background Facts

In Mangundhla and Another v South African Reserve Bank and Others [2026] ZAGPJHC 579, handed down on 1 June 2026, Judge Wilson considered a different factual scenario but the same fundamental legal question.

Mr Mangundhla had traded cryptocurrency lawfully between 2015 and 2017 using his Luno account.

Between January 2018 and March 2020, however, he used both his own account and that of a second applicant to transfer approximately 1,680 Bitcoin—worth around R182 million at the time—to wallets accessible only through foreign cryptocurrency exchanges.

FinSurv concluded that the conduct amounted to the exportation of Bitcoin and its underlying value from South Africa without SARB approval, constituting a contravention of Regulation 10(1)(c).

The Deputy Governor subsequently declared forfeit approximately R6 million in Bitcoin assets and funds held in Standard Bank and Luno accounts.

The applicants challenged the forfeiture.

The Judgment

Judge Wilson adopted a markedly different approach from that taken in Standard Bank.

Bitcoin Is Both "Money" and "Capital"

The court held that Bitcoin constitutes both money and capital for purposes of the Exchange Control Regulations and the Currency and Exchanges Act.

The court found support for this interpretation in both the wording and purpose of the legislation.

The Purpose of Exchange Control Matters

Relying on South African Reserve Bank v Leathern, the court identified three key objectives of the exchange control framework:

• Preventing the loss of foreign currency resources through transfers of financial assets abroad.
• Controlling the movement of financial and real assets into and out of South Africa.
• Protecting the efficient functioning of the country's commercial and financial systems.

Judge Wilson concluded that the Bitcoin transactions in question constituted precisely the type of cross-border movement of value that the exchange control framework was designed to regulate.

A Direct Rejection of Standard Bank

Judge Wilson went further than merely distinguishing the earlier judgment.

He expressly described the decision in Standard Bank v SARB as "clearly wrong" and adopted a fundamentally different interpretive approach.

This has created a direct conflict between two divisions of the High Court that can ultimately only be resolved by the Supreme Court of Appeal or the Constitutional Court.

The Judicial Conflict: Why It Matters

The conflict between these judgments is more than an academic disagreement.

It has immediate practical consequences.

Enforcement Uncertainty

FinSurv currently faces a situation where SARB's forfeiture powers in respect of cross-border crypto transactions may be interpreted differently depending on which court hears the matter.

SARB's Appeal

SARB's appeal against the Standard Bank judgment was already underway.

The Mangundhla judgment significantly strengthens SARB's legal argument and introduces a competing judicial interpretation that will likely receive careful consideration by the Supreme Court of Appeal.

Inconsistent Outcomes

South African courts generally seek consistency in the application of law.

A position where market participants face different outcomes depending on jurisdiction is inherently unsustainable and will require clarification from a higher court.

Legislative Reform May Overtake the Courts

The dispute may ultimately become less significant than it currently appears.

By the time the SCA considers the matter, Parliament may already have enacted legislation expressly bringing crypto assets within South Africa's capital flow management framework.

The Regulatory Response: SARB, FSCA and the Draft Capital Flow Management Regulations

While the courts have debated the scope of existing legislation, regulators and policymakers have continued to move forward.

The Existing FSCA Framework

The FSCA's involvement predates the current litigation.

In October 2022, crypto assets were formally declared financial products under the Financial Advisory and Intermediary Services Act (FAIS).

This required Crypto Asset Service Providers (CASPs) to obtain FSCA authorisation.

Further regulatory developments followed:

• CASPs became accountable institutions under FICA.
• Anti-money laundering and counter-terrorist financing obligations were imposed.
• The Travel Rule was implemented through FIC Directive 9.
• South Africa exited the FATF grey list in October 2025.

Collectively, these developments established a progressively more sophisticated regulatory framework for digital assets.

From Regulatory Gap to Regulatory Framework

The broader trend is clear.

South African regulators are no longer asking whether crypto assets should be regulated, but rather how that regulation should be implemented.

Over the past four years, crypto assets have progressively been incorporated into South Africa's financial regulatory framework through:

• FSCA licensing of CASPs;
• FICA accountability obligations;
• Implementation of the Travel Rule;
• the Crypto Asset Reporting Framework (CARF); and
• Proposed capital flow management reforms.

Viewed collectively, these developments suggest a deliberate policy direction toward integrating digital assets into the existing financial system rather than regulating them as a separate asset class.

The Draft Capital Flow Management Regulations

The policy direction became unmistakable during the 2026 Budget Speech when Finance Minister Enoch Godongwana announced that crypto assets would be brought within South Africa's capital flow management regime.

National Treasury subsequently published the Draft Capital Flow Management Regulations (CFMR) on 17 April 2026.

If enacted, these regulations will replace the Exchange Control Regulations of 1961 entirely.

Key features include:

Crypto Formally Classified as Capital

The draft regulations expressly classify crypto assets as capital for exchange control purposes, directly addressing the legal question at the centre of the Standard Bank litigation.

Cross-Border Transfers Subject to Approval

Cross-border crypto transfers would require compliance with South Africa's capital flow management framework.

Transactions may fall within the R2 million annual discretionary allowance, while larger transfers could require specific SARB approval.

A "Positive Bias" Approach

National Treasury and SARB have described the reforms as reflecting a more modern, risk-based approach focused on reporting, surveillance, and high-risk transactions rather than blanket pre-approval requirements.

Industry Reaction

Industry stakeholders have expressed mixed views.

Some exchanges have welcomed regulatory certainty, while others have raised concerns regarding self-custody rights and the practical operation of cross-border crypto transfers.

Closing the Regulatory Gap

Notably, SARB's own 2020 Position Paper acknowledged that existing exchange control regulations did not effectively regulate crypto asset transfers.

The proposed reforms can therefore be viewed as a direct response to a regulatory gap that policymakers themselves had previously identified.

What This Means for Practitioners and Market Participants

For Crypto Holders and Investors

Cross-border crypto transfers are increasingly likely to become subject to reporting, approval, and compliance requirements.

Individuals should begin preparing for a more regulated environment.

For CASPs and Licensed Exchanges

Licensed providers are likely to become central gatekeepers within the capital flow management framework.

Compliance capabilities may become an increasingly important competitive differentiator.

For Financial Institutions

Banks servicing crypto-related businesses will need to monitor evolving exchange control obligations closely and reassess compliance frameworks where necessary.

For Tax Practitioners

The implementation of CARF, combined with proposed exchange control reforms, signals a future in which crypto asset transactions are subject to significantly greater visibility and regulatory oversight.

The notion that crypto transactions exist outside regulatory scrutiny is becoming increasingly difficult to sustain.

Key Takeaways

For investors: Cross-border crypto transfers are likely to face increased reporting and approval requirements.

For exchanges and CASPs: Regulatory compliance will become increasingly central to operational strategy and customer onboarding.

For businesses using digital assets: Existing assumptions regarding exchange control treatment should be reassessed in light of ongoing legislative reform.

For advisers and practitioners: The interaction between exchange control, tax reporting, AML obligations, and crypto regulation will continue to evolve rapidly.

Conclusion: Convergence on the Horizon

The legal controversy sparked by Standard Bank v SARB has generated an extraordinary period of judicial, legislative, and regulatory activity.

While the Mangundhla judgment deepens the immediate legal conflict, it also increases the likelihood of definitive guidance from South Africa's higher courts.

At the same time, the Draft Capital Flow Management Regulations provide a legislative pathway that may ultimately resolve much of the uncertainty regardless of the outcome of the appeal process.

Regardless of how the Supreme Court of Appeal ultimately resolves the conflict between Standard Bank and Mangundhla, the direction of travel appears increasingly clear.

South Africa is moving toward a comprehensive framework in which crypto assets are regulated alongside traditional financial assets, with greater emphasis on transparency, reporting, and cross-border oversight.

For market participants, the question is no longer whether regulation is coming, but how best to prepare for it.

References

• Mangundhla and Another v South African Reserve Bank and Others [2026] ZAGPJHC 579 (1 June 2026)
• Standard Bank of South Africa v South African Reserve Bank and Others [2025] ZAGPPHC 481; 2025 (5) SA 289 (GP) (15 May 2025)
• Draft Capital Flow Management Regulations, 2026 (National Treasury, 17 April 2026)
• Exchange Control Circular No. 3/2026 (SARB FinSurv, 3 March 2026)
• FSCA Declaration of Crypto Assets as Financial Products (October 2022)
• FIC Directive 9 (Travel Rule, effective April 2025)
• CARF Notice R.6887, Government Gazette No. 53735 (28 November 2025)