Is Cryptocurrency subject to exchange control?
Simone Esch | Head of Tax, PKF Cape Town
In a landmark ruling, the Pretoria High Court handed down judgment on the 23rd May 2025 in Standard Bank of South Africa v South African Reserve Bank (SARB) and Others [1]that cryptocurrencies do not constitute "capital" under South Africa's Exchange Control Regulations, 1961 (Excon). This judgment at the time meant that crypto assets are not subject to South Africa’s exchange control regime and thus there would be no need for SARB approval to export crypto. However, this clarity is now uncertain, as the SARB has since applied to appeal the ruling, leaving the legal standing of cryptocurrencies in limbo.
THE CASE
The case was brought by Standard Bank against the SARB, the Minister of Finance, Nedbank and the liquidators of Leo Cash and Carry, in which the bank was attempting to recover funds it had lent to Leo Cash and Carry (LCC) before the company was placed in liquidation in 2022.
LCC had accounts with Standard Bank, including a Money Market Account pledged as security for an overdraft, and an account with Nedbank. SARB's Financial Surveillance Department (FinSurv) investigated LCC for suspected exchange control contraventions related to cryptocurrency transactions, where LCC allegedly acquired more than 4400 bitcoin (around R556 million in value at the time) and transferred them to a Seychelles-based crypto exchange.
Consequently, FinSurv ordered a hold on LCC's accounts and later declared funds forfeited to the state, approximately R16.4 million from Standard Bank's Money Market Account and R10 million from LCC's Nedbank account.
Standard Bank challenged the forfeiture, arguing it was unlawful and inter alia that the existing Excon regulations, specifically Regulations 3(1)(c) (regarding payments to non-residents) and 10(1)(c) (regarding the export of capital), do not apply to cryptocurrency. They argued that cryptocurrency is neither "currency" nor "capital" as defined in the regulations and therefore LCC's cryptocurrency activities did not constitute a contravention of Excon, making the forfeiture baseless.
SARB defended the forfeiture, asserting that LCC was involved in a scheme to unlawfully export capital/currency from South Africa using cryptocurrency, thereby contravening Excon regulations. Even if not explicitly mentioned, cryptocurrency transactions that result in value leaving the country fall within the spirit and purpose of the Excon regulations.
COURT DECISION
The Court decided to set aside the forfeiture and agreed with Standard Bank that the existing Excon Regulations do not apply to cryptocurrency. Adopting a restrictive interpretation (as required for regulations that impose penalties), the court found that cryptocurrency does not fall under the definition of "currency" or "money" in Regulation 3(1)(c), nor "capital" in Regulation 10(1)(c).
The judgment explicitly stated that there is a "regulatory lacuna" concerning cryptocurrencies and that it is the legislature's role, not the courts', to amend the laws to cover such new asset classes.
The court called for legislative action to address this gap and from experience on similar prior judgments[2] involving Excon this reprieve may be short lived. As a result of the judgement handed down in the Oilwell case Excon 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.
SARB APPEAL
This time it has taken SARB just two weeks to appeal this legal loophole that would allow unlimited funds to leave the country using cryptocurrencies.
On Monday (2 June), it filed an appeal against a Pretoria High Court ruling that cryptocurrencies are not subject to South African exchange control regulations. This means that the operation and execution of the High Court’s decision is suspended and does not take effect until the Supreme Court of Appeal (or a higher court like the Constitutional Court, if applicable) has made its decision on the appeal.
We now await with bated breath for the outcome of the appeal and particularly our higher Courts’ stance on South Africa’s exchange control policy as a whole.
[1] (047643/2023) [2025] ZAGPPHC 48,