National Treasury and Reserve Bank want to expropriate cryptocurrency in South Africa
South Africa’s National Treasury has published draft Capital Flow Management Regulations that would update the country’s Apartheid-era exchange control rules to crack down on people with cryptocurrency.
Carel van Wyk, an industry leader, said Treasury had not given nearly enough time for public comment, while an advocacy group warned that the proposed rules raise “serious Constitutional concerns”.
Among the proposed regulations was that anyone with crypto assets above an as-yet-unspecified threshold would be required to declare them and could be forced to sell them to the government.
Crypto holdings over the threshold may also not be traded without written permission, except through specially designated crypto asset service providers.
The draft was published on Friday, 17 April 2026, alongside a joint statement by Treasury and the South African Reserve Bank and a gazette notice inviting public comment.
Initially, South Africa’s central bank and treasury department gave until 10 June 2026 for public participation, but it has since revised that deadline to 18 May 2026.
“The public has been given a mere 22 business days to analyse the draft, spread awareness, organise responses, and submit structured comments,” Van Wyk said.
Van Wyk is the founder and CEO of Moneybadger, the company that provides crypto payments infrastructure used by Pick n Pay and various fintech platforms in South Africa.
He also co-founded Luno, a company which grew into one of South Africa’s largest crypto asset service providers. Van Wyk exited Luno in 2019 but remained on as an infrastructure manager until 2023.
“That is not enough time for changes of this magnitude. Industry, civil society, and the public deserve a meaningful opportunity to engage,” Van Wyk said.
“I’d encourage anyone who cares about how South Africa regulates digital assets to read the draft and make their voice heard before the window closes.”
Van Wyk said these were some of the most far-reaching changes to South Africa’s 60-year-old exchange control framework.
“They touch on constitutional questions around privacy, property rights, and freedom of association,” he said.
Law firm ENS Africa agreed that the draft regulations represented a fundamental overhaul of South Africa’s exchange control framework.
Risk-based framework promise out the window
Treasury said the regulations would introduce a more modern, risk-based framework with fewer transaction pre-approvals and greater focus on reporting, surveillance, and illicit financial flows.
However, the draft itself proposed comprehensive controls over crypto assets, foreign assets, cross-border payments, non-resident securities, and enforcement powers.
The BitcoinZAR Advocacy Group, established by Francois Harris, Gareth Grobler, and Louis Nel in response to the draft regulations, said that Treasury was being disingenuous.
“The draft regulations contradict the promised risk-based approach. Instead of targeting genuine high-risk activity, the draft applies a blunt, permission-based system to all crypto-assets,” the group stated.
“It treats personal self-custody Bitcoin transfers the same as large institutional flows. This directly undermines the modern, risk-based framework that was promised in the 2026 Budget.”
The draft Capital Flow Management Regulations contain several worrisome proposals, including severe restrictions on crypto asset trading and provisions for seizing assets.
Investors cannot buy, sell, borrow, or lend crypto assets above a certain threshold with anyone other than an authorised crypto asset service provider without explicit permission from Treasury.
When acquiring crypto from an authorised provider, investors must state the specific purpose of the transaction and are legally forbidden from using the crypto for any other purpose.
If an investor no longer requires the crypto for the purpose stated in their application, they must immediately offer to sell it back to Treasury or an authorised service provider.
“The crypto assets may be repurchased in South African Rand at the price at which it was sold to that person or at another price Treasury or the authorised crypto service provider may determine.”
Taking or sending crypto assets out of the country, or using them to make payments to anyone outside of South Africa, is prohibited without explicit permission.
Individuals must declare crypto assets they intend to remove from the country to an enforcement officer when entering or leaving South Africa, when requested to do so.
Officers have the authority to search individuals and seize crypto assets if they suspect they are being moved in contravention of the regulations.
Declaration of crypto holdings to the state
Investors must declare their crypto assets in writing to the National Treasury within 30 days of obtaining control if the value exceeds a threshold, which has yet to be disclosed.
This declaration must detail exactly when, how, and where the assets were acquired. Treasury then has the right to force the holder to sell their crypto assets for South African Rand.
Treasury, or an authorised dealer, may acquire the crypto assets for a price not less than the market value, in South African rand, on the day of purchase.
Additionally, once a foreign crypto asset has been declared, an investor is strictly prohibited from selling, transferring, or disposing of it without permission and conditions set by the National Treasury.
The Treasury has the power to attach and, if reasonable grounds exist, ultimately seize an investor’s crypto for the state if they reasonably suspect the assets are involved in a contravention of the regulations.
Where crypto assets are forfeited to the State, the owner is legally required, upon written demand, to hand over all passwords, PINs, or codes necessary for Treasury to gain access to and control over the assets.
“The broad powers of attachment, blocking, and forfeiture engage sections 22 (freedom of trade), 25 (property rights), and 33 (just administrative action) of the Constitution,” the BitcoinZAR Advocacy Group said.
“Any limitation of fundamental rights must be reasonable, proportionate, and clearly defined. The current draft falls short of this legal standard by relying on sweeping, undefined discretion.”
The BitcoinZAR Advocacy Group has launched a web page to help interested parties generate a ready-to-send email or the comment text for their submission to Treasury.
MyBroadband contacted the National Treasury and the South African Reserve Bank for additional details regarding the proposed regulations. This article will be updated should they provide feedback.
Loading ...