Introduction

In May 2025, the Pretoria High Court delivered a significant judgement declaring that cryptocurrencies do not fall within the scope of the South African Reserve Bank’s Exchange Control Regulations. This judgement was made in the case of the Standard Bank of South Africa v. the South African Reserve Bank & others and set aside a forfeiture order made by the South African Reserve Bank (SARB) in respect of funds from cryptocurrency transactions.

The Standard Bank of South Africa (Standard Bank) was successful in its argument on the classification of cryptocurrency with the Pretoria High Court, as part of its judgement, determining:

“Did the LCC contravene Reg 3(1)(c)? The answer lies in one’s interpretation of the word currency. Certainly, gold, securities, etc. and the import of South African banknotes do not include cryptocurrency. Cryptocurrency is not money. The construction that cryptocurrency is money, by looking at the definition of money which includes foreign currency, is strained and impractical. If cryptocurrency were money, then the crypto wallets would be attached in terms of Reg 22B.”

The SARB filed an appeal against this decision on 2 June 2025 stating that the court erred when it stated that cryptocurrency does not fall within the ambit of the Regulations despite the transfer of capital by LCC through its cryptocurrency transactions.

Brief facts of the case

Leo Cash and Carry (Pty) Ltd (LCC) obtained an overdraft facility of R40 million from Standard Bank in January 2020 and used its money market account of R15 million as collateral. One of the terms in the overdraft agreement with Standard Bank required LCC to terminate its account with Nedbank (the sixth respondent) with whom it had an existing overdraft facility of R10 million at the time. In January 2020, Standard Bank granted LCC the overdraft and LCC settled its R10 million overdraft with Nedbank.

In February 2020, Standard Bank received an instruction from the SARB’s financial surveillance department (FinSurv) to place a hold on the account of LCC as a result of an investigation initiated by the SARB in 2019 which investigated LCC (and other entities) on violations of the Exchange Control Regulations, particularly relating to transactions on cryptocurrency. The block order was later lifted, but Standard Bank was asked to maintain surveillance on the account. Standard Bank discovered fraud by LCC and successfully initiated a liquidation process against LCC.

In December 2022, FinSurv invited Standard Bank and LCC’s liquidators to make written representation on why the money in LCC’s account, and money market account should not be forfeited. Despite the representations, SARB’s deputy governor proceeded to make a forfeiture order on the accounts under Regulations 22B.

Dissatisfied with the order, Standard Bank, as a secured creditor, brought a review application to set aside the forfeiture order citing it as unlawful.

It was not in contention that LCC was involved in a cryptocurrency transaction. It was recorded that LCC opened a business account with VALR (Pty) Limited (VALR) to enable LCC’s clients to make payments from their fiat account to their cryptocurrency account. There were several transactions involving the movement of money from Rand wallet to bitcoin wallet of the VALR account of LCC. In 2019, LCC sent 4,405.9783 BTC, the value of R556,020,325.68, to Huobi Global. The question therefore was to determine if LCC contravened the provisions of the Regulations.

Legal issues

The main legal issue was whether LCC’s cryptocurrency transactions violated Regulations 3(1)(c) and 10(1)(c) of the Exchange Control Regulations, thereby giving SARB the power to make the forfeiture order. The court focused its decision on the definition of ‘currency’ under Regulations 3(1)(c) and ‘capital’ under Regulations 10(1)(c).

Regulation 3(1)(c) provides that “subject to any exemption which may be granted by the treasury or a person authorised by the treasury, no person shall, without permission granted by the treasury or a person authorised by the treasury and in accordance with such conditions as the treasury or such authorised person may impose – (c) make any payment to, or in favour of, or on behalf of a person resident outside the Republic, or place any sum to the credit of such person;”

The court stated that cryptocurrency is an asset which is bought and sold. If indeed it is classified as money, the challenge would be whether it is deposited or can be declared by anybody when entering or leaving the country. As cryptocurrencies are mere codes on a digital ledger it therefore makes it unnatural and fictitious to read into the nature of the Regulations.

On the other hand, Regulation 10(1)(c) provides that, “except with permission granted by the treasury and in accordance with such conditions as the treasury may impose, no person shall, enter into any transaction whereby capital or any right to capital is directly or indirectly exported from the Republic.”

What’s next?

Changes to the regulations on crypto in South Africa seem necessary and the Pretoria High Court; in relying on Oilwell (Pty) Ltd v Protec International Ltd and Others (Oilwell) issued a strong call to regulators to address this loophole as this Oilwell case once led to the amendment of the regulation to incorporate intellectual property rights as capital under Regulation 10(4).