The recent judgment in Standard Bank of South Africa v South African Reserve Bank and Others [2025] ZAGPPHC 481 raised an urgent and timely question: Can South Africa’s age-old Exchange Control Regulations (“Excon Regulations”) adequately govern the complexities of modern digital finance, specifically related to cryptocurrency and decentralized technology?
At the center of the Court’s determination were Regulations 3(1)(c) and 10(1)(c) of the Excon Regulations. Regulation 3 broadly places certain restrictions on “the export of currency, gold, securities etc….” and Regulation 3(1)(c) specifically provides that no payments may be made to persons outside of the country without the Treasury’s permission. Regulation 10(1)(c) places a similar restriction on the export of capital. Despite minor amendments, the Excon Regulations remain largely unchanged and were being applied to a blockchain technology, which was not in existence when it was first drafted.
The applicant argued that Regulation 3(1)(c) could not be applied to cross border cryptocurrency transactions since cryptocurrency was neither currency, gold, nor a security. They further argued that the transfer of cryptocurrency was not payment since cryptocurrency is not recognized as money or legal tender in South Africa. Regarding Regulation 10(1)(c), the applicant contended that cryptocurrency does not fit into the definition of “capital”, which definition the Court was to restrictively interpret in line with the prevailing precedent. They elaborated that to include cryptocurrency within the meaning of “capital” would require legislative amendment, which goes beyond the Court’s authority.
While the Reserve Bank attempted to counterargue that cryptocurrency fell within the definition of “currency” and that cryptocurrency was a form of payment, the Court agreed with the applicant’s submissions, finding that cryptocurrency does not constitute currency/money or capital and fell beyond the scope of application of the Excon Regulations. In this regard, the Court noted that “a regulatory framework addressing cryptocurrency is long overdue”.
This decision is currently subject to an appeal initiated by the Reserve Bank.
A Legal System at a Crossroads
This case highlights a critical disconnect between financial regulations and the realities of the digital age. While the Excon Regulations were designed to control capital outflows and preserve economic stability, it was never intended to address decentralized digital assets that have become the norm of today’s financial market.
The judgment has called for the development of a clear, fit-for-purpose regulatory framework to govern cryptocurrencies in South Africa. Without legal certainty, financial institutions, regulators, and courts are left to navigate a legal vacuum ill-suited to the global, intangible, and fast-evolving nature of digital finance. With South Africa’s growing interest in digital assets, this case underscores the urgent need for comprehensive and modernized legislation to ensure regulatory clarity, legal certainty, and economic integrity in the age of cryptocurrency.