Bitcoin and Other Crypto‑assets Are Neither “Currency” Nor “Capital”

On 15 May 2025, the Gauteng Division of the High Court, Pretoria, ruled in Standard Bank of South Africa Ltd v South African Reserve Bank & Others (case 047643/2023) that Bitcoin and other crypto‑assets are neither “currency” nor “capital” for purposes of Regulations 3(1)(c) and 10(1)(c) of the 1961 Exchange Control Regulations (“the EC Regulations”) and therefore fall outside the present exchange‑control net.

The Court set aside a R16.4 million forfeiture order obtained by the South African Reserve Bank (“SARB”) over funds pledged to Standard Bank of South Africa Ltd (“Standard Bank”), but left intact SARB’s forfeiture of R10 million held at Nedbank because Standard Bank lacked standing over that account. The decision exposes a regulatory vacuum, curtails SARB’s immediate forfeiture powers in crypto‑related matters, and intensifies pressure on National Treasury to modernise South Africa’s exchange‑control regime.

Leo Cash & Carry (Pty) Ltd (“LCC”) opened business accounts with Standard Bank in 2019 and pledged R15 million in a money‑market call account as security for a R40 million overdraft. LCC immediately used R10 million of the facility to settle an overdraft held with Nedbank. SARB’s Financial Surveillance Department (“FinSurv”) suspected LCC of buying Bitcoin locally and exporting it by transferring coins to offshore exchanges. On 28 February 2020 FinSurv blocked both Standard Bank accounts under Regulations 22A and 22C of the EC Regulations. When FinSurv later declared the two balances were forfeited under Regulation 22B, Standard Bank applied to review that decision.

Key Findings of the Court

Definition of “Currency” and “Capital”

The Court held that crypto‑assets are digital codes, not legal‑tender money, and therefore do not constitute “foreign currency” or “capital” as those terms are used in Regulations 3(1)(c) and 10(1)(c) of the EC Regulations. The Court further rejected a strained construction that would treat crypto‑assets as money, which finding is consistent with the Supreme Court of Appeal’s view that penal regulations must be restrictively interpreted.

Forfeiture under Regulation 22B

Because no primary exchange‑control contravention was proved, SARB lacked a lawful basis to forfeit the R16.4 million pledged to Standard Bank. The SARB accordingly acquired the funds bona fide and for value, falling within the protection of section 9(2)(b)(i) of the Currency and Exchanges Act 9 of 1933.

Standing over Nedbank Funds

Standard Bank’s interest in the R10 million that had been transferred to Nedbank was merely contingent upon insolvency dividends and Standard Bank therefore lacked locus standi to challenge forfeiture of that balance.

Practical Implications for Corporates and Investors

(Cross‑border crypto transfers presently fall outside exchange‑control approvals. Until the EC Regulations are amended, exporting Bitcoin or other crypto‑assets from South Africa will not, in itself, breach Regulations 3 or 10. Banks and secured creditors enjoy strengthened protections. Properly executed pledge‑and‑cession agreements give banks a defensible interest against FinSurv forfeiture, provided the underlying debt was incurred in the ordinary course of business.

SARB’s enforcement toolkit is narrowed and accordingly future forfeiture applications premised solely on crypto dealings will face the same definitional hurdle. Crypto‑asset service providers remain subject to Financial Sector Conduct Authority (“the FSCA”) licensing and Financial Advisory and Intermediary Services Act 37 of 2002 compliance, but not to exchange‑control reporting.

Recommended Action Points

Corporates moving value offshore via crypto‑assets should nonetheless maintain robust anti‑money‑laundering and sanctions‑screening processes, mindful that other statutes, including the Financial Intelligence Centre Act 38 of 2001 and the Prevention of Organised Crime Act 121 of 1998, continue to apply. Authorised Dealers should also revisit their internal policies.

While FinSurv circulars currently state that crypto transfers cannot be approved under exchange‑control rules, transactional monitoring should track rand‑to‑crypto conversions to manage reputational and Anti-Money Laundering risk. Lenders taking security over cash deposits should document pledge and cession arrangements meticulously and register ancillary security where appropriate, to ensure the ‘bona fide purchaser’ defence is available. Entities engaged in initial‑coin offerings, tokenisation or cross‑border crypto settlements should consider voluntary disclosure to FinSurv until legislative clarity emerges.

Anticipated Regulatory Developments

National Treasury has already flagged comprehensive exchange‑control reform in Annexure E to the 2025 Budget Review and is expected to consult on draft amendments that would bring crypto‑assets expressly within Regulations 3 and 10 of the EC Regulations. SARB, the FSCA, and the Prudential Authority continue to collaborate through the Inter‑Governmental Fintech Working Group, whose 2021 Crypto‑Asset Position Paper envisaged phased regulation of cross‑border use‑cases. An appeal to the Supreme Court of Appeal remains a live possibility as SARB may seek clarity to avoid divergent provincial precedents. Market participants should monitor the court roll and SARB media releases.

Concluding Remarks

The judgment is a landmark in South African commercial law, underscoring the need for statutory modernisation in the face of digital‑asset innovation. Until reform occurs, corporates can draw comfort that ordinary crypto dealings do not, per se, offend exchange‑control rules, but should remain alive to broader regulatory and contractual risks.

When dealing with issues of this nature, specialised legal advice should be taken to ensure that the issues are carefully navigated and that risks are mitigated.