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South Africa’s Cryptocurrency Regulatory Shift: What You Need to Know

In a significant development for South Africa’s cryptocurrency landscape, Finance Minister Enoch Godongwana has confirmed that the government will not create a comprehensive exchange control exemption framework for digital assets. Instead, the South African Reserve Bank (SARB) is preparing to release a targeted regulatory framework later this year focusing specifically on cross-border crypto transactions.

Court Ruling Forces Regulatory Reassessment

This policy direction comes in the wake of a landmark May 2025 Pretoria High Court decision that declared South Africa’s existing exchange control regulations inadequate for governing cryptocurrencies. Judge Mandlenkosi Motha delivered a scathing critique of financial regulators’ failure to establish clear rules for the crypto sector, despite digital assets existing for over 15 years.

“Cryptocurrency is not money,” Motha ruled emphatically. “The construction that cryptocurrency is money, by looking at the definition of money which includes foreign currency, is strained and impractical. Cryptocurrency is an asset that is bought and sold.”

The judge referenced an academic article presented by SARB itself, which described cryptocurrencies as “nothing more than code on a digital ledger” with a fundamentally global nature. His ruling effectively exempted crypto assets from current exchange controls until new regulations are implemented – a decision SARB has since appealed.

The Coming Regulatory Framework

Godongwana’s announcement came in response to parliamentary questions from Democratic Alliance MP Wendy Alexander. He revealed that SARB’s forthcoming framework will establish:

• Parameters for cross-border crypto transactions
• Conditions for crypto asset service providers (CASPs)
• Administrative responsibilities
• Reporting requirements

The framework aims to prevent regulatory arbitrage and illicit financial flows while enabling legitimate crypto transactions. It will specifically address activities of CASPs – including major platforms like Binance, Luno, and VALR – when they facilitate cross-border value transfers using crypto assets.

Existing Regulatory Measures

While awaiting the new framework, several existing regulations already apply to cryptocurrency in South Africa:

• Since December 2022, CASPs are classified as accountable institutions under the Financial Intelligence Centre Act (FICA)
• The Financial Sector Conduct Authority (FSCA) declared crypto assets financial products in October 2022
• Licensed financial services providers dealing in crypto must comply with Financial Advisory and Intermediary Services (FAIS) Act requirements

Regulatory Backstory and Controversies

The court ruling represents a potential setback for SARB’s Financial Surveillance Department (FinSurv), which had taken a hardline stance against crypto transactions since 2021. At that time, FinSurv:

• Pressured banks to block cryptocurrency purchases from offshore exchanges
• Declared transferring crypto out of South Africa a criminal offense
• Warned about tax and exchange control implications for “staking” crypto assets

SARB’s position on cryptocurrency classification has been inconsistent over the years. While treating crypto similarly to money for exchange control purposes, officials have repeatedly denied it qualifies as currency:

• In 2018, former deputy governor Francois Groepe suggested calling them “cyber tokens” rather than cryptocurrencies
• Governor Lesetja Kganyago has consistently referred to them as “crypto assets”
• The bank refused to clarify whether Bitcoin would be considered foreign currency when El Salvador made it legal tender

What Comes Next?

As South Africa’s cryptocurrency ecosystem awaits SARB’s new framework, several key questions remain:

• Will the Supreme Court of Appeal uphold Judge Motha’s ruling?
• How will the new regulations balance financial oversight with innovation?
• What protections will be established for consumers and investors?
• How will the framework address emerging technologies like decentralized finance (DeFi)?

With cryptocurrency adoption growing steadily in South Africa, the coming months will prove crucial in shaping the country’s digital asset regulatory landscape for years to come.

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