South Africa’s exchange control system, managed by the South African Reserve Bank (“SARB”), aims to regulate the movement of capital across borders by South African residents. Historically, this system has overseen the transfer of legal tender, securities, and foreign investments. The emergence of cryptocurrency - decentralised, borderless, and intangible - has challenged the relevance of these longstanding rules.

Exchange control in South Africa is primarily governed by the Exchange Control Regulations (the “Excon Regulations”), issued under the Currency and Exchanges Act 9 of 1933. These regulations prohibit the export of capital, such as financial assets and investments, or funds, including cash and cash equivalents, without SARB’s prior approval. Notably, these rules were drafted well before the advent of digital assets and blockchain technology, as cryptocurrency is a form of digital currency that first entered the global market in 2009. This means applying the Excon Regulations to cryptocurrency requires interpretation that the law does not currently support.

Cryptocurrencies, by their very nature, are not issued by a central authority and are not regarded as legal tender. However, they can be traded, stored, or transferred electronically for various purposes, such as payment and investment, using cryptographic technology. In recognition of this, South African tax authorities began referring to “crypto assets” rather than “cryptocurrency” in the Explanatory Memorandum on the Taxation Laws Amendment Bill, 2020, published in 2021, aligning terminology with evolving regulatory standards.

The key legal issue remains whether crypto assets fall within the scope of the Excon Regulations. This question was addressed in the recent High Court case Standard Bank of South Africa v South African Reserve Bank & Others (Case No. 047643/2023) [2025] ZAGPPHC 481 (15 May 2025). In the matter, the court examined whether SARB could impose exchange control restrictions on cryptocurrency transactions. The court held that SARB could not, finding that cryptocurrency currently falls outside the definitions of “capital” and “money” under the existing regulatory framework. Crucially, the court ruled that SARB cannot unilaterally extend these definitions to include cryptocurrency - only a legislative amendment could achieve that. This judgment confirms that, under current law, the movement of cryptocurrency across borders does not constitute an “export” of capital as contemplated by the Excon Regulations. For now, crypto assets exist outside the reach of South Africa’s exchange control system.

That said, this regulatory loophole is unlikely to remain open indefinitely, and the SARB has also noted an appeal against the abovementioned judgment. SARB has participated in the Intergovernmental Fintech Working Group (IFWG), which has called for enhanced regulatory oversight of crypto assets. SARB is also in the process of developing its regulatory framework. However, until formal legislative changes are introduced, SARB’s powers remain limited, and cryptocurrency continues to function in a legally uncertain and unregulated territory. For now, crypto still slips through the cracks — but the window is closing. The law may be behind the curve, but it’s catching up fast.