On 15 May 2025, the high court handed down a landmark judgment in the case of Standard Bank of South Africa v South African Reserve Bank and Others. The judgment addressed the position of cryptocurrency assets in light of South Africa’s Exchange Control Regulations.
Read the case here:
https://www.saflii.org/za/cases/ZAGPPHC/2025/481.html
5.8 million South African hold a crypto asset
Cryptocurrency was first introduced to the global market in 2009, with its most famous form being Bitcoin. In an October 2024 publication by the South African Revenue Service (SARS) it was estimated that more than 5.8 million South Africans hold a crypto asset. As new technologies emerge, the South African government faces several challenges in determining how to integrate them into existing legislation. This article examines an application by Standard Bank to set aside a forfeiture order issued by South African Reserve Bank (SARB) against Leo Cash and Carry (Pty) Ltd (‘LCC’), following multiple cryptocurrency transactions that allegedly violated the South African Exchange Control Regulations. The judgment is now being taken on appeal by SARB ruled that cryptocurrency is not subjected to South Africa’s Exchange Control Regulations.
The high court analysed the legality of a forfeiture order issued in respect of R16 404 700.37 and R10 000 000.00, which was due to Standard Bank, in accordance with a prior pledge and cession agreement concluded between Standard Bank and LCC. The forfeiture order follows an investigation from the SARB’s Financial Surveillance Department which found that LCC had contravened exchange control regulations.
Purpose of the legislation
Passed in 1961, the Exchange Control regulations promulgated in terms of section 9 of the Currency and Exchange Act, aims to discourage the export of capital from South Africa and protect the domestic economy. The court in South African Reserve Bank v Leathern N.O. and Other held that the purpose of the regulation is three-fold: to prevent loss of foreign currency resources through the transfer abroad of financial capital assets held in South Africa, to ensure effective control of financial and real assets in and out of the country, and to avoid interference with the commercial, industrial and financial systems of the country.
It is apparent that the legislative intent of these regulations is protective and forward-looking, which may support an expansive interpretation that includes digital finance instruments. In the matter before the high court, Standard Bank provided multiple arguments as to why they felt that cryptocurrency is not subject to these provisions. While logically sound, the arguments made by Standard Bank undermines the purpose of the legislation and the economic stability the regulations were designed to preserve.
Standard Bank’s argument
When assessing Standard Bank’s claim, the high court swiftly dismissed the claim for R10 000 00.00 held in a Nedbank account, ruling that it does not have legal standing to challenge this claim and thereafter only considered a claim for R16 404 700.37 which was held in a Money Market Account. The key to Standard Bank obtaining judgement and setting aside the forfeiture order was proving that LCC had not contravened any Exchange Control regulations in dealing with cryptocurrencies – enabling them to successfully cede the monies as per their agreement with LCC.
In doing so, Standard Bank argued that cryptocurrency is neither a currency or legal tender in South Africa and consequently, the Exchange Control regulations did not apply to it. Further to this argument, Standard Bank argued that definitions in the regulations should be given restrictive interpretation and only if the legislation was amended to include cryptocurrency would it be subject to the regulations. Taking the argument even further, Standard Bank argued that cryptocurrency was not capital and that it could not be applied to the Exchange Control regulations without a dedicated framework regulating cryptocurrency as an asset.
At this point, one may ask themselves why Standard Bank felt cryptocurrency was not money or a form of capital? In answering this, Standard Bank submitted that the fundamental difference is that when one purchased cryptocurrency, a Blockchain recorded your purchase, and the record of this purchase would be stored on thousands of computers globally. Additionally, the transfer of cryptocurrency to another was not payment. It was argued that in this sense, cryptocurrency was not a sum of money.
SARB’s argument
On the other hand, SARB’s argument attempted to future-proof the regulation in light of the digital economy, arguing for the acceptance of cryptocurrency in the Exchange Control regulations. In doing so SARB argued that both the PWC report on which the investigation into LCC was made, and the allegations made against LCC were uncontested. Drawing from South African Reserve Bank v Leathern N.O, SARB submitted that because there was a reasonable suspicion of a contravention, the high court was not entitled to set aside the blocking order.
In response to the argument that cryptocurrency was not subject to the regulations, SARB argued that a contravention of regulation 3(1)(c) did not require a payment or the identity of any receipt. Furthermore, that cryptocurrency was covered by the regulations, noting that in the definitions of the regulations, money was defined as “foreign currency or any bill of exchange or other negotiable instrument”. Counsel for the respondents (SARB and others) argued that cryptocurrency was an instrument which permitted payment in currency, which is not a legal tender in the Republic.
In highlighting the importance of regulating cryptocurrency under Exchange Control regulations, SARB submitted that when rands are paid into a South African cryptocurrency wallet, the rands would become cryptocurrencies, and the rand value would be lost from the South African balance sheet. Subsequently, in a foreign jurisdiction that cryptocurrency enabled the holder of the cryptocurrency to withdraw a sum of money equal to that cryptocurrency, operating as a form of payment.
Lastly, when considering whether Standard Bank was entitled to the funds in the Money Market Account, SARB argued that Standard Bank was not entitled to the money because in terms of the cession and pledge agreement between the Standard Bank and LCC, express consent was required to realise any collateral held by Standard Bank.
The Gauteng Division of the High Court
In reviewing the arguments presented before the high court, Judge Motha noted that it was undeniable that the LCC was involved in a scheme to directly or indirectly export funds, foreign currency and capital from SA. The court set out the extent of the LCC’s transactions, noting that during 2019 LCC sent 4 405.9783 Bitcoin amounting to R556 020 356, 68 to Huobi Global and concluding that it was therefore incontrovertible and uncontroverted that the LCC partook in cryptocurrency transactions.
The court highlighted that the answer lies in one’s interpretation of the word ‘currency’ and held firm that cryptocurrency is not money. Noting that trying to view cryptocurrency as money leads to strained and impractical results and if it were to be viewed as money, crypto wallets would be attached in terms of regulation 22B. Some of the practical questions raised by the court were whether one can deposit cryptocurrency and whether one must declare cryptocurrency when entering or leaving the Republic.
In conclusion, the judge held that on any interpretation, cryptocurrency fell outside the ambit of capital in regulation 10(1)(c) and that, as Standard Bank argued, a regulatory framework dedicated to addressing cryptocurrency is overdue – citing a published paper by the SARB itself highlighting the lack of a proper regulatory legal framework specifically highlighting that “there is no regulatory protection that would compensate the owner or user of cryptocurrency for any loss that may be suffered”.
Leave to appeal
Considering the above, the judge held that LCC did not contravene any regulations, and the forfeiture of the money held in the Money Market Account was set aside. On 23 May, SARB filed an application for leave to appeal, seeking to overturn the ruling. The main argument being that the high court should have concluded that although not considered money, cryptocurrency could for the very least be seen as ‘capital’, triggering the provisions of regulation 10(1)(c). As a result of the appeal, section 18(1) of the Superior Courts Act provides that the courts decision is suspended pending the outcome of SARB’s application for leave to appeal.
Given this prevalence, the ruling has profound implications for not only financial institutions and regulations but also for ordinary citizens whose assets may be subject to the regulations. Without legislative intervention, the South African Government may find itself powerless in monitoring and regulating the significant volume of digital wealth cryptocurrency holds.
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