In Brief

• South Africa’s Finance Minister, Enoch Godongwana, stated no plans for an exchange control exemption framework.  
• Judge Mandlenkosi Motha emphasized cryptocurrency is not money, exposing legal inadequacies.  
• A clear crypto asset framework will close exchange-control loopholes and standardize cross-border crypto reporting.

For Africa, developing a clear crypto asset framework requires revision, reiteration and collaboration. For South Africa, this notion is presented with the Finance Minister, Enoch Godongwana, confirming that the National Treasury has no intentions of drafting a comprehensive exchange control exemption framework.

Instead, the minister revealed a collaborative effort headed by the South African Reserve Bank, in publishing a legal framework within the year outlining various business activities of crypto asset service providers.

Closing the Cross-Border Loophole With A Comprehensive Crypto Asset Framework.

“The National Treasury is currently engaging the SARB on updating and strengthening the exchange control legislative framework to enable the above framework,” Godongwana said.

SARBs have been active participant in regulating their region’s use and adoption of cryptocurrency. This regulatory push stems from the May 2025 ruling from Judge Mandlenkosi Motha at the Pretoria High Court. The proceedings unveiled how existing exchange control regulations are designed for traditional fiat currencies and capital movements. They simply do not apply to digital assets.

Judge Motha was straightforward:

“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,”

Facts are facts, and digital assets are fundamentally different, rendering most laws ineffective. This ruling created a temporary regulatory vaccum for cross-border crypto transactions until new laws surface. Fortunately, SARBs has always been at the forefront of ensuring crypto compliance in South Africa.

Judge Mandlenkosi Motha at the Pretoria High Court.[Photo:MyBroadBand]

“The National Treasury, through the Financial Regulators Steering Committee, comprising the SARB, FSCA, Prudential Authority and the National Treasury, will coordinate further discussions.”

Godongwana pointed out how the new crypto asset framework will establish clear “parameters, conditions, administrative responsibilities, and reporting requirements” governing how CASPs operate within the nation.

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The main aim is to quickly zip up any regulatory arbitrage and curb illicit financial flows, often a major concern when dealing with CAPs. This worry may stem from similar concerns with Nigeria sighting over $2 million in suspicious transactions associated with cryptocurrencies.

Since December 2022, after South Africa classified CASPs as accountable institutions, exchanges like Luno, VALR and Binance all fall under the Financial Intelligence Centre Act. These subjects such exchanges to Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), and Combating Proliferation Financing (CPF) obligations.

Additionally, when FICA declared crypto as a financial product under the FAIS Act, any and all intermediary and advisory services immediately fell under its supervisory web. The anticipated crypto regulation developments will provide a third pillar, formalized rules for managing cross-border crypto transactions within South Africa.

The Complexity of South African Crypto Laws

The journey towards crypto compliance in South Africa kick-started back in June 2021, with the Intergovernmental Fintech Working Group (IFWG). It was the first structured proposal which touched on the three core issues most regulators tackled first when it came to digital assets:

• Money Laundering & Terrorist Financing: Addressed by FIC oversight.
• Consumer Protection & Market Conduct: Overseen by the FSCA.
• Circumvention of Exchange Controls: The domain of SARB’s Financial Surveillance Department (FinSurv).

Within a year the South Africa’s FSCA formally classified crypto assets as financial products, making the region a pioneer in regulating digital assets. This was a milestone, but a key issue arose in the following months: regulating crypto service providers.

In November 2022, Enoch Godongwana introduced a vital amendment defining crypto asset service providers (exchanges, custodians, and wallet providers ) as accountable institutions. While it did provide a base in covering the assets and the providers, it also drew out the complexity of establishing a crypto asset framework.

For starters, tension arose within South Africa’s regulatory approach. While the SARBs taxed crypto gains as income or capital gains, Governor Lesetja Kganyago refused to recognize cryptocurrencies as legitimate “currency”. It’s a dichotomy, taxing gains like money but refraining from its currency status for exchange controls.

CHECK OUT: How South Africans Are Spending $112k Monthly Via Crypto Payments

This counter approach brought about the Pretoria High Court ruling, leading the Reserve Bank to file an appeal to overturn the court’s ruling in classifying crypto as not “money” or “capital“. These crypto regulation developments highlight how complex crypto compliance in South Africa truly is.

Recently, Luno raised a concerning loophole in its regulation. The lack of proper classification for digital assets as either “onshore” or “offshore” was hindering institutional adoption, compromising accurate reporting to the Reserve Bank. They advocated for clear classification to encourage reinvestment within the local economy.

The upcoming crypto asset framework seeks to resolve this inconsistency specifically for cross-border movement, defining its treatment under exchange control rules without necessarily conferring full “currency” status.