There is still some way to go to define what crypto is in South Africa. (Image: Pexels) Gauteng high court Judge Mandlenkosi Motha is no stranger to powerful paragraphs in his decisions, and he delivered a few, as the kids would say, bars in the 2025 judgment Mzansi’s crypto community was most anticipating.
“The consequences of the massacre of Black people in Sharpeville reverberated inside the corridors of the Apartheid economy and shook the very foundations of the regime. To stem the tide of the resultant capital flight and a run on the rand, the apartheid regime passed the Exchange Control Regulations in 1961 (Excon), which, save for a few changes, is still in place… the vexed question is whether these 60-plus old Excon Regulations are fit for purpose to deal with the machinations in the world of cryptocurrency.”
In the matter before him, where the South African Reserve Bank attempted to forfeit R16.4-million from a Standard Bank money market account linked to Leo Cash and Carry (LCC), a liquidated entity that had funnelled funds to foreign cryptocurrency exchanges like Huobi (now known as HTX), Motha ruled that cryptocurrency was not money or foreign currency.
He argued instead that classifying it as such was a “strained and impractical” reading, further ruling that crypto was not capital under Regulation 10(1)(c), declaring that, in case the country’s crypto enthusiasts weren’t aware, the industry operated in a regulatory vacuum.
It wasn’t, however, the mic drop that it seemed at the time.
The other side of the coin
His gavel-swinging colleague, Judge Stuart Wilson, had a wildly different finding in a judgment just over a year later, where the applicant (Square Mangundhla) used Luno accounts to purchase and transfer nearly R182-million worth of bitcoin to foreign cryptocurrency exchanges. The South African Reserve Bank seized about R6-million in assets.
Wilson explicitly rejected Motha’s decision, declaring it “clearly wrong”. Wilson ruled that bitcoin is capital, defining capital broadly as any financial asset capable of holding value or acting as a medium of exchange.
He continued this line by saying that transferring bitcoin to foreign wallets constitutes an illegal export of capital, concluding that bitcoin has all the characteristics of money (as a store of value and negotiable instrument), thereby making it subject to forfeiture. He criticised the previous judgment for a “degree of magical thinking” that overplayed crypto’s intangible nature while ignoring the economic reality of capital flight.
The conflicting judicial attempts to retrofit 1961 laws on to modern technology do nothing more than demonstrate the necessity of the government’s latest policy interventions.
In a joint communication last week, the South African Reserve Bank and the Financial Sector Conduct Authority (FSCA) clarified the status of crypto assets within the domestic payment system, largely vindicating Judge Motha’s technical legal analysis regarding the definition of money, while pre-emptively reflecting the functional concerns of Judge Wilson.
Gaining clarity
The notice said that crypto assets “are neither money as defined in the NPS Act, nor funds and are therefore not legal tender”. Why? Because the South African Reserve Bank interprets payments strictly as transactions involving money or monetary value, thus crypto currently falls completely outside the National Payment System (NPS) Act. This conveniently aligns with Motha’s conclusion.
But it gets wilder. While not money, the FSCA declared crypto assets to be a financial product under the FAIS Act in 2022. This means crypto intermediaries (you know them as Crypto Asset Service Providers, or Casps) must be licensed to protect consumers. But this declaration was specifically, and quite confusingly, “not intended to legitimise crypto assets as currency”.
Which brings us neatly back to what the South African Reserve Bank is currently trying to do by revising the NPS Act to allow them to explicitly declare and regulate non-money payment instruments (read: stablecoins) in the future.
This is where National Treasury’s draft regulations enter the chat. They represent the most direct response to the legal vulnerabilities exposed in the Motha ruling.
Treasury is completely replacing the 1961 Exchange Control Regulations with the new Capital Flow Management Regulations of 2026. The media statement even explicitly said that these new amendments “address gaps in the current regulations, including in relation to cross-border crypto asset transactions”.
Playing with Newton’s third law
In its current form, the draft regulation resolves this judicial clash. It acknowledges Motha’s underlying point that the 1961 regulations contained gaps regarding crypto assets.
Simultaneously, it achieves Wilson’s ultimate goal: giving regulators the teeth to prevent the unregulated export of financial capital via digital ledgers.
By bringing the definitions of capital into 2026 parlance and explicitly including crypto assets, Treasury is shifting away from relying on judges to creatively interpret 60-year-old laws, instead moving towards a modern, risk-based approach to capital flows.
The tension between the judgments shows the limits of applying analogue-era laws to digital-era assets.
While the high courts currently disagree on whether crypto can be seized under the 1961 definitions of capital and money, the lady at the Pick n Pay checkout just wants to pay for her groceries and help the gardener send money back home to Malawi. DM