Transferring Bitcoin from anywhere in South Africa, even your own wallet, to an offshore exchange or other crypto asset service provider is a crime.
This was the South African Reserve Bank (SARB) clarification to questions MyBroadband raised regarding an FAQ document published on its website in June.
The Reserve Bank also said that it regards decentralised exchanges, or DEXes, as offshore for the purpose of exchange control regulations in South Africa.
This comes after the Reserve Bank confirmed that South Africans may not buy cryptocurrency from offshore exchanges using their debit or credit card.
“With the application of current exchange control policy, individuals are not prohibited from withdrawing their crypto assets held on a South African-domiciled crypto asset trading platform to a private wallet,” a spokesperson for the SARB said.
“However, transferring the crypto assets from the self-hosted or private wallet to an offshore-based wallet — whether hosted or unhosted, or operated by a business entity such as a foreign-domiciled crypto asset trading platform or an individual — would constitute a contravention of Exchange Control Regulation 10(1)(c).”
Exchange Control Regulation 10(1)(c) is a blanket block on the export of capital from South Africa without permission from National Treasury.
It states that “no capital or right to capital” may be exported “directly or indirectly”.
Other regulations then grant permission for authorised dealers such as banks to allow their clients to transfer money overseas, or use their credit cards to purchase physical goods from platforms like Amazon and digital goods like games from services like Steam.
The Reserve Bank said it is developing regulations for companies like Luno, VALR, and AltCoinTrader to allow their clients to transfer crypto assets offshore.
Until then, it is a criminal offence to transfer your cryptocurrency from such platforms to overseas exchanges or even decentralised exchanges.
“From the Financial Surveillance Department’s perspective, decentralised exchanges would be viewed as foreign crypto assets service providers,” the Reserve Bank said.
Contravening South Africa’s exchange control regulations carries a penalty of a R250,000 fine and possibly up to five years imprisonment.
The fine may be increased up to the value of the offending transaction under certain circumstances. However, the regulations specifically link this escalation to “any security, foreign currency, gold, bank-note, cheque, postal order, bill, note, debt, payment or goods”.
MyBroadband asked the Reserve Bank for clarification on several other questions. These are reproduced below.
What legal basis is there to consider crypto assets as a “right to capital”?
It is the official view of the Financial Surveillance Department (FinSurv) of the South African Reserve Bank that Exchange Control Regulation 10(1)(c) applies to crypto assets acquired on a domestic crypto asset trading platform should the crypto assets be used to circumvent the Exchange Control Regulations by exporting value from South Africa.
This is not a new view as suggested in recent media articles and has been consistently communicated through, among other channels, the frequently asked questions on crypto assets as published on the SARB FinSurv web pages.
It is, therefore, reiterated that all current exchange control conditions outlined were in place prior to the emergence of crypto assets and did therefore not constitute additional or new legislation introduced.
Has the Reserve Bank considered that it effectively incentivises South African crypto enthusiasts to export their capital via SDA or TCS PIN rather than support local players like Luno, VALR, and AltCoinTrader?
Has the Reserve Bank considered that it is making it difficult for South Africans to participate in the burgeoning Decentralised Finance space and that many crypto assets are not readily available from local exchanges, e.g. LUNA, Solana, Polygon?
Has the Reserve Bank considered the implications for the global partnerships that promising startups like Luno, VALR, and AltCoinTrader have by restricting the export of crypto assets?
Regarding “staking”, the FAQ states: “There are both tax and exchange control implications of staking crypto assets. These implications are exacerbated if an individual’s crypto assets are staked via an offshore third party.” — What are the implications referred to in this statement?
Individuals are not prohibited from staking their crypto assets. The exchange control implications become relevant if the individual uses an off-shored based third party to stake their crypto assets, with the principle articulated [in the first question] above applying.