The National Treasury and the South African Reserve Bank (SARB) have moved to assure crypto traders that new laws are not seeking to criminalise the possession of these assets, and they won’t apply retrospectively.
The authorities were responding to a wave of public and media backlash over the draft Capital Flow Management Regulations, which are currently open for public comment.
Broadly, the regulations aim to modernise how cross-border flows are managed by overhauling the 1961 regulations by shifting from a pre-approval model to a risk-based surveillance system.
One of the more meaningful developments is the formal treatment of crypto assets within the exchange control framework.
According to legal experts at Cliffe Dekker Hofmeyr, crypto has occupied an awkward space, as everyone knew it could be used to move value across borders.
The Proposed Regulations deal with that directly by defining crypto assets and bringing them within scope.
“This development also lines up with what we’re seeing more broadly from a regulatory perspective in South Africa…[such as] declaring crypto assets as ‘financial products’.”
The legal experts noted that the inclusion of crypto does not create a separate or lighter regime for the assets.
Instead, it applies the same core exchange control rules to a new asset class.
“Crypto is not being liberalised; it is being absorbed into the existing system,” it said. However, this means that crypto can no longer be viewed as a workaround to traditional exchange control.
“If anything, its inclusion signals that the regulator is catching up to how capital actually moves today and closing off one of the more obvious gaps in the system.”
However, many crypto traders have lashed out at the proposed changes, arguing that it’s a move by the state to criminalise cross-border crypto trades, while infringing on privacy and private ownership.
One of the biggest concerns raised is that draft regulations do not provide any insight into the treatment of persons who already hold acquired crypto assets.
Other legal minds have warned that these individuals could face significant restrictions on how they buy and sell crypto assets going forward.
Taking feedback into account
National Treasury and the SARB have moved to assure stakeholders that their inputs to the regulations are being considered.
They also extended the public comment period from 18 May 2026 to 30 June 2026 to allow more time for feedback.
Addressing some of the fundamental concerns already raised, the authorities said that the regulations do not intend to criminalise possession of crypto assets—nor will they apply retrospectively.
“A proposed cross-border crypto asset framework, in the form of a draft manual, will soon be released for public comment to complement the draft Regulations,” they said.
“This draft manual will provide clarity on the proposed activities that would result in a crypto asset transaction being considered as cross-border and the transaction being subject to appropriate capital flow management measures.”
The manual will also outline the obligations and responsibilities of authorised crypto asset service providers.
The authorities added that the concerns that holders of crypto assets, or even other assets like gold or foreign currency, may, in certain circumstances, be required to sell these to the state or banks dealing in foreign exchange are misplaced.
“Any requirement to dispose of these assets would arise only under limited circumstances, such as where an offence has been committed,” they said.
“Further, there have been various exemptions and relaxations of exchange controls over the years, resulting in South Africans being able to legitimately externalise capital for foreign investment diversification or hold foreign assets in various forms.”
The authorities said that the current draft Regulations are meant to strengthen their abilities to detect, deter or disrupt illicit financial flows.
“The proposed framework will complement the regulatory regimes already implemented by the Financial Intelligence Centre and Financial Sector Conduct Authority.”
