Where South African Crypto Law Stands As We See It

South African law is settled on most of the crypto questions that matter to an investor. You may own crypto assets. You pay tax on the gains. The exchange you buy them on has to be licensed.

One question remains open. What is a crypto asset, in law, when it moves across the border?

Through 2026 that question became more open. Two High Courts have now answered it in opposite directions. An appeal is pending at the Supreme Court of Appeal. In addition, while the courts work through it, National Treasury and the Reserve Bank are building a new framework that would answer the question by statute instead.

This regulatory uncertainty set us, as the Fedgroup Private Markets team back a few months. But have some clarity and are back on track.

If you hold crypto, or you are considering a tokenised investment, these suggested changes are worth understanding properly.

How the position developed

The story started last year already.

Note, the judgments appear to conflict at the same level of court. At the same time, the regulatory work has continued regardless.

Why the "money or capital" distinction matters

The Exchange Control Regulations were made in 1961 under the Currency and Exchanges Act. Measured against modern financial regulation they are very short and very broad. Their central mechanism is a single prohibition: you may not take money or capital out of the country without permission, whether directly or indirectly. Your annual allowances, the forms your bank asks you to complete, the approvals required for offshore investment, all of it follows from that one prohibition.

The regulations do not list the things you might move. In 1961 there was no need, it was covered whether it was money or capital.

So each time a new asset class appears, the same question arises. Is this money or capital? If it is, then moving it offshore was always regulated, whether or not anyone was enforcing the point. If it is not, it sat outside the perimeter entirely.

The two judgements

In Standard Bank, decided in May 2025, the Pretoria High Court considered a forfeiture arising from a company that had acquired more than 4 400 bitcoin and transferred them to an exchange based in the Seychelles. The Reserve Bank's Financial Surveillance Department had declared funds forfeited to the state. Standard Bank challenged the forfeiture on the basis that the Exchange Control Regulations do not apply to cryptocurrency. The court agreed and set the forfeiture aside.

In Mangundhla, decided in June 2026, the Johannesburg High Court considered a similar set of facts. Between January 2018 and March 2020 the applicant had moved just under 1 680 bitcoin, worth roughly R182 million at the time, to wallets accessible only through exchanges registered outside South Africa. The Reserve Bank declared forfeit just under R6 million held in the applicants' bank and crypto trading accounts.

This time the court held that Bitcoin is both money and capital for the purposes of regulation 10(1)(c). Its reasoning was functional: Bitcoin can be converted into fiat currency, can be used directly to buy goods and services, and works as both a store of value and a medium of exchange. The court expressly disagreed with Standard Bank and described that finding as clearly wrong.

Two divisions of the same court, on materially similar facts, reaching opposite conclusions. That is what the Supreme Court of Appeal now has to resolve.

Until it does, the best description of the legal position is that it is contested. Anyone who tells you crypto is definitively inside or outside exchange control is choosing a judgment rather than describing the law.

"Money" is not one classification

On 28 May 2026 the Reserve Bank's National Payment System Department and the FSCA published a joint communication on crypto assets used for domestic payment purposes. It clarified that crypto assets used for payments, stablecoins included, are not payments in terms of the National Payment System Act, fall outside that Act, are not money as defined in it, and are not legal tender. Its scope is domestic: payments for goods and services, and transactions between people and businesses inside South Africa. It expressly does not extend to cross-border payments.

So the communication says crypto is not money under the National Payment System Act, while a court says Bitcoin is money under the Exchange Control Regulations. Both can be correct at the same time.

"Money" is not a single legal classification that applies across all statutes. It is defined separately in each one, for that statute's purposes. This is ordinary in law and unhelpful in practice, because it means you cannot take a finding under one framework and apply it to another.

What the draft framework actually proposes

On 3 August 2026 National Treasury and the Reserve Bank published a draft Crypto Assets Manual for cross-border activities. It sits alongside the draft Capital Flow Management Regulations and sets out how a cross-border crypto regime would work in practice: how a firm applies to operate as an Authorised Crypto Asset Service Provider, what permissions and conditions attach to cross-border crypto transactions, and what has to be reported to the Financial Surveillance Department.

Three key features:

1. The trigger is activity-based. The proposed cross-border event is a transfer between a domestic Authorised CASP and an offshore CASP, or from a domestic Authorised CASP to a wallet where the transaction produces a cross-border flow. The framework focuses on the transaction rather than on the type of crypto asset involved.

2. Individuals would use their existing allowances. The draft contemplates that resident individuals may externalise crypto assets through Authorised CASPs using the single discretionary allowance or the foreign capital allowance. This is narrower and more workable than a blanket requirement for advance approval on every transfer.

3. At this stage it is limited to individuals. Only individuals, under the current draft, would be permitted to externalise crypto through Authorised CASPs in this way. That is a significant limitation for anyone designing a product that moves institutional or pooled capital across a border.

The Manual is still in draft and comments close on 30 September 2026. The impact on the local platforms and their experience might prove significant and some have laid out their positions.

What it means if you are simply holding crypto

For most individual holders, little changes immediately.

The draft Regulations and the draft Manual are both out for comment and neither is law. The judgments conflict, and the appeal has not been heard. Awareness is the appropriate posture rather than action.

In any event, it is worthwhile to keep your house in order:

1. Know whether your holdings have ever crossed a border. If you have moved crypto to or from an offshore exchange, or you hold assets on a platform not domiciled in South Africa, that is the exposure worth understanding. Both forfeiture cases involved exactly this pattern: crypto bought in South Africa and moved to wallets held through offshore exchanges.

2. Keeping records: dates, amounts, counterparties, wallet addresses. Good records are what make future compliance straightforward.

Ordinary domestic activity is not the subject of any of this. Buying and selling in rand on a licensed South African exchange, and holding what you buy, is not what the courts or the draft framework are addressing. On tax, the established income tax rules continue to apply, with treatment depending on whether the activity is revenue or capital in nature, although SARS has issued further guidance during 2026 and crypto reporting obligations are expanding.

If your position is complex, that is a conversation for a professional adviser rather than an article. We are describing regulatory developments, not advising you on your circumstances.

What it means for tokenised investments

A tokenised investment has two parts. There is the asset that generates the return, and there is the wrapper that lets you buy and hold a share of it. The wrapper is a token on a blockchain. Underneath it is something real that produces income: a loan, a fund, a property, a bond.

The wrapper being a token does not remove exchange control implications. A cross-border movement settling on a public blockchain rather than through a bank is precisely the transaction the draft framework is built to capture.

But the location of the underlying asset does not settle the question on its own either. Because the proposed regime is activity-based, what matters is the transaction and the flow it creates. For any tokenised product, that means looking at several things together:

• where the underlying asset sits

• where the issuer, platform and counterparty are resident

• where your money actually moves when you buy and when you are paid

• whether an offshore CASP or an offshore wallet appears anywhere in the chain

• whether the transaction amounts to an import or export of capital under the applicable framework

Work through that list and most products resolve quickly.

Where the underlying asset is offshore, buying into it means moving South African capital across a border. That is not prohibited. It is unresolved, and lack of resolution carries a cost even where nothing is forbidden. Legal opinions have to be refreshed as the position moves. Approval timelines cannot be forecast. So, there is a real possibility that the framework under which you launch under might be replaced by the one currently in draft.

Where the underlying asset is South African, the platform and counterparties are South African, you pay in rand, you are paid in rand, and no offshore CASP or wallet appears in the chain, there is no cross-border flow to classify. The exchange control question, in any of its current versions, has nothing to attach to.

That is a narrower claim than saying it all comes down to geography, and it is the accurate one.

Why we have been quiet

We spent part of this year working on a tokenised product built around an offshore asset. These developments required us to reconsider it.

We could have proceeded, obtained an opinion, and argued the position later. We took the view that a retail investment product whose regulatory treatment was being contested in two High Courts and simultaneously redrafted by Treasury was not a reasonable risk to take with our investors' money. So we looked at our South African funds instead, and we have spent the past few months on that work rather than on writing about it.

We will have more to say about what we found shortly.

This article describes regulatory developments of general application. It is not financial, tax or legal advice, and it does not take account of your personal circumstances. Speak to a licensed adviser before acting.