The Crypto Exchange Control Debate Is Far From Settled

The legal position on cryptocurrency and exchange control in South Africa has become considerably less certain than many market participants may have assumed.

In 2025, the High Court in Standard Bank v South African Reserve Bank concluded that cryptocurrency was neither "money" nor "capital" for purposes of South Africa's exchange control framework. The decision was widely interpreted as confirmation that crypto assets fell outside the scope of the existing Exchange Control Regulations, at least until legislators decided otherwise. The recent judgment in Mangundhla v South African Reserve Bank takes a fundamentally different view.

The Gauteng High Court held that Bitcoin constitutes both "money" and "capital" for purposes of the Exchange Control Regulations. The Court went further, describing the earlier Standard Bank judgment as "clearly wrong". It found that transferring Bitcoin to wallets held on foreign exchanges amounted to the export of capital and therefore required exchange control approval.

The significance of the judgment extends beyond cryptocurrency itself. South Africa now has two High Court decisions reaching opposite conclusions on the same legal question. Businesses, investors and advisers are left navigating a position where the answer depends on which judgment one follows.

The Court's reasoning is difficult to dismiss from a policy perspective. If crypto assets can be used to transfer value offshore, excluding them from exchange control oversight would create an obvious gap in the regulatory framework. The judgment recognises the practical reality that digital assets can perform many of the same economic functions as traditional financial assets, regardless of the technology on which they operate.

South African regulators have already moved towards greater oversight of crypto assets through licensing requirements, anti-money laundering measures and the regulation of Crypto Asset Service Providers. Exchange control has remained the more uncertain piece of the puzzle.

The judgment also highlights a broader challenge. South Africa continues to apply legislation drafted decades before digital assets existed to an asset class that was never contemplated when the current exchange control framework was developed. Courts can interpret existing legislation, but they cannot remove the uncertainty that inevitably arises when new technologies are forced into old legal categories.

Whether Mangundhla is followed by other courts, overturned on appeal or ultimately overtaken by legislative reform remains to be seen. What is clear is that businesses involved in cross-border crypto transactions should no longer assume that exchange control considerations can be ignored.

The notion that crypto exists outside the reach of exchange control has always been difficult to reconcile with the purpose of the regime itself. If value can leave South Africa through a digital asset as easily as through a bank account, it was probably only a matter of time before the courts were asked to confront that reality.