Never mind the tax – have your crypto transactions left you exposed to Excon?
Never mind the tax – have your crypto transactions left you exposed to Excon?
By Hylton Cameron, Director
Last year the issue of cryptocurrency came before the Gauteng High Court in Pretoria, in Standard Bank of South Africa v The South African Reserve Bank 2025 (5) SA 289 (GP) 15 May 2025 (the Standard Bank case). The facts and issues are rather complicated but the main point for this article, is that the court said:
“Exchange regulations do not govern the transfer of cryptocurrencies in and out of South Africa. Any cross-border exchange can therefore not be authorized by SARB”.
In essence, cryptocurrency did not constitute “capital” for exchange control purposes.
Due to the above, the relevant party did not contravene the Exchange Control Regulations.
The judge stated that the regulatory framework addressing cryptocurrency is long overdue and took into account that a restrictive interpretation should be applied where there are possible criminal penalties.
We understand that this case has been taken on appeal.
Fortunately, or unfortunately, that was not the end of the matter. This year, on 1 June there was the case of Square Mangundhla v South African Reserve Bank (2022/029979) [2026] ZAGPJHC 579 (1 June 2026) (the Mangundhla case). This case was also decided in Gauteng, in the High Court in Johannesburg.
The Summary at the beginning of the judgment is as follows:
“Cryptocurrency, at least in the form of Bitcoin, is both “money” and “capital” for the purposes of the Exchange Control Regulations, 1961 and Currency and Exchanges Act 9 of 1933. The contrary decision in Standard Bank of South Africa v South African Reserve Bank 2025 (5) SA 289 (GP) is clearly wrong.”
The above being rather clear, and on an interesting positive note, in my view, on certain issues there is certainly room for disagreement in the judiciary – even if this creates uncertainty for the South African citizen.
In the Mangundhla case approximately R182m via Bitcoin “left the country”. Without going into the technical aspects, in essence the judge stated the Exchange Control rules would effectively be worthless in terms of taking money out the country as one could simply convert your funds to Bitcoin. This would be at odds with the underlying purpose of the exchange control rules. Accordingly, the text and purpose (my emphasis) all point to the same rules, i.e. Bitcoin is “capital” for exchange control purposes and hence subject to such exchange control rules.
The potential issue being that if your crypto assets have been moved from a domestic platform to a foreign platform you would arguably have exported funds, and this could be subjected to exchange control rules.
The New Rules
The above could leave you confused as to what you can or cannot do. Due to the Appeal of the Standard Bank case, the Standard Bank judgment is not effective. This means that the issue will only be settled once the appeal is heard and judgment is provided. In the interim this means that the Mangundhla judgment is effective and is persuasive for other High Courts.
Soon the issues will be academic, but it is rather important for those who were involved in such transactions.
The matter will be academic (in the future) as the current Exchange Control Rules (almost 300 pages) will be replaced by the Capital Flow Management Regulations (less than 40 pages).
The draft rules have been published and were subject to comments from the public (final date for comments was 18 May 2026). Once the comments have been considered the new rules will be promulgated – at this stage such timing is unknown.
Per the draft Capital Flow Management Regulations the new definition of “capital” includes crypto assets. It must also be noted that crypto assets are specifically excluded from the definition of “currency”.
Conclusion
If you are considering “taking” funds off-shore via the use of Bitcoin or have already made use of such/similar cryptocurrency, per the Mangundhla case there is a significant risk the transaction/s are subject to the current exchange control rules.
Going forward, per the new rules, cryptocurrency will be part of capital and hence subject to “exchange control rules” or technically the Capital Flow Management Regulations.