On 15 May 2025, the High Court of South Africa handed down a landmark ruling addressing the legal status of cryptocurrency under the country’s Exchange Control Regulations, 1961. This decision is particularly significant for financial institutions, crypto investors, and businesses dealing in cross-border digital assets.

Below, we unpack the key aspects of the decision and what it means for businesses operating in South Africa’s evolving digital finance landscape.

Background to the Dispute

The case centred on Leo Cash and Carry (LCC), a wholesale business that opened a business account with Standard Bank in August 2019. In January 2020, the bank approved a R40 million overdraft facility, secured by a pledge over LCC’s money market account containing R15 million.

Shortly thereafter, the South African Reserve Bank (SARB), via its Financial Surveillance Department, alerted Standard Bank to suspected exchange control violations involving cryptocurrency. A hold was placed on LCC’s accounts in February 2020 due to concerns over funds being moved to foreign crypto exchanges. This investigation prompted a series of legal actions, culminating in the SARB’s decision in February 2023 to forfeit R16.4 million held in LCC’s Standard Bank accounts to the State.

Core Legal Question

The legal dispute primarily concerned whether cryptocurrency constitutes “currency” or “capital” under South Africa’s Exchange Control Regulations, and whether the SARB’s forfeiture order was valid in the absence of express contraventions involving recognised forms of money.

Standard Bank’s Legal Arguments

Standard Bank challenged the forfeiture order and raised several key points:

• It acquired the R16.4 million lawfully through a pledge and cession agreement executed in good faith and in the ordinary course of business.
• The funds in question had no proven link to exchange control violations.
• Cryptocurrency is not recognised as legal tender, money, or currency under South African law. Therefore, transactions involving digital assets fall outside the scope of Regulation 3(1)(c) and Regulation 10(1)(c) of the Exchange Control Regulations.
• The regulations were drafted prior to the emergence of blockchain-based assets and, as such, contain a regulatory gap that does not address cryptocurrencies.

SARB’s Response and Legal Position

The SARB defended its position on the following grounds:

• Despite the pledge and cession, ownership of the funds remained with LCC, and therefore the State was entitled to declare those funds forfeit.
• SARB argued that cryptocurrency is an “instrument” that can be used to make payments in a foreign currency and should thus be considered a method of transferring capital offshore.
• The transfer of Bitcoin and other crypto assets to foreign exchanges constituted unauthorised export of capital, violating Regulation 10(1)(c).
• SARB cited the Afrikaans version of the regulations (equally authoritative), which explicitly refers to “kapitaaluitvoer”—interpreted to mean the export of financial resources or value abroad.

High Court’s Findings

The High Court delivered several important findings that shed light on the legal treatment of digital assets in South Africa:

• Cryptocurrency is not “money”: It exists solely as code on a decentralised blockchain ledger and is not backed by a central bank or commodity.
• It is not legal tender and cannot be naturally or reasonably interpreted as falling under the current definitions of “money” or “capital” in the Exchange Control Regulations.
• Cryptocurrency does not fall under Regulation 3(1)(c) (which restricts payment to non-residents) or Regulation 10(1)(c) (which regulates the export of capital).
• The court declined to interpret the regulations expansively to include cryptocurrency, holding that such an extension would amount to legislating by interpretation.

As a result, the court ruled that the forfeiture was not legally sustainable under the existing regulatory framework.

Implications and Remaining Questions

Although the High Court’s decision temporarily clarified the legal standing of cryptocurrency under exchange control law, the SARB has filed an appeal, and the ruling is therefore not yet final.

Several unresolved issues remain, including:

• Can South African corporates legally acquire foreign currency to buy crypto assets abroad?
• Is it permissible to round-trip value using cryptocurrency (buying crypto locally and selling offshore)?
• What permissions, if any, are required when crypto transactions may indirectly result in capital export?

SARB’s current policy guidance remains cautious:

• South African residents may purchase crypto within their annual allowance limits.
• Repatriation of value via cryptocurrency is not permitted.
• Non-residents cannot freely transfer sale proceeds from local crypto sales abroad.

Contact our financial regulatory law team for expert guidance before entering into any cryptocurrency-related transactions that may trigger exchange control scrutiny.