Online Reporter
Cryptocurrencies are not subject to South African exchange control regulations, according to a recent Pretoria High Court case brought by Standard Bank against the South African Reserve Bank (Sarb).
Cryptocurrencies do not constitute “capital” or “currency” under SA’s exchange control regulations.
“This means crypto assets are not subject to the country’s strict exchange control regime, offering long-awaited clarity for the crypto industry,” says this analysis by law firm Baker McKenzie. While this judgment removes the need for Sarb approval to export crypto, the relief may be temporary, as future legislative amendments could reassert regulatory oversight.
For now, the decision marks a significant shift in how digital assets are treated under South African financial law.
“This brings an end to a debate in the SA crypto asset industry as to whether cryptocurrencies require exchange control approval for their export out of South Africa. However, from experience on similar prior judgments on the Exchange Control Regulations, this reprieve may be short lived.”
This judgment makes it clear that until the law is amended, cryptocurrency transfers outside SA are not covered by exchange control rules.
“The decision underscores the pressing need for legislative reform to provide clarity and certainty in this rapidly evolving area,” according to Desiree Reddy and Ntokozo Ngubane at Norton Rose Fulbright.
Standard Bank was attempting to recover funds it had lent to Leo Cash and Carry (LCC) before it was liquidated in 2022.
The bank extended a R40 million overdraft facility to LCC in January 2020 on certain conditions, one of them being that it move its banking business to Standard Bank and close its account with Nedbank. The company was also required to place R10 million as collateral in a money market call account.
LCC started drawing down on the Standard Bank overdraft facility and immediately transferred R10 million to settle its overdraft with Nedbank. — Moneyweb.
