In his ruling, Judge Mandlenkosi Motha firmly chastised the South African Reserve Bank<\/a> (SARB) for failing to regulate cryptocurrency properly. He also ruled that cryptocurrency was not money.<\/p>\n\n\n\n \u201cCryptocurrency is not money. The construction that cryptocurrency is money, by looking at the definition of money, which includes foreign currency, is strained and impractical,\u201d Motha ruled.<\/p>\n\n\n\n \u201cCryptocurrency is an asset that is bought and sold. There are practical challenges and implications if cryptocurrency is viewed as money.\u201d<\/p>\n\n\n\n Motha cited an academic article<\/a> that SARB and FinSurv placed before the court, which stated that cryptocurrencies are nothing more than code on a digital ledger.<\/p>\n\n\n\n \u201cThus, they exist anywhere and everywhere and have a global nature,\u201d the article stated.<\/p>\n\n\n\n Motha had little sympathy for South Africa\u2019s central bank and financial regulators\u2019 lack of a comprehensive framework to govern crypto assets.<\/p>\n\n\n\n \u201cCryptocurrency has been in existence for over 15 years; one cannot say SARB has been caught napping,\u201d he said.<\/p>\n\n\n\n \u201cIn the same way, intellectual property rights had a niche carved for them in exchange control regulations, cryptocurrencies need some legislative attention.\u201d<\/p>\n\n\n\n Motha\u2019s ruling effectively exempted crypto assets from South African exchange controls until new exchange control regulations are introduced.<\/p>\n\n\n\n In response to Parliamentary questions about the ruling, Godongwana said that Treasury and the Reserve Bank would not focus on developing exchange control exemptions for cryptocurrencies.<\/p>\n\n\n\n Instead, he said SARB would publish a framework with parameters, conditions, administrative responsibilities, and the reporting requirements applicable to cross-border transactions in crypto assets.<\/p>\n\n\n\n In addition to working with National Treasury to develop the new regulations that Godongwana said were underway, SARB has also appealed Motha\u2019s judgment.<\/p>\n\n\n\n It said the Pretoria High Court erred in finding that cryptocurrency is not considered money for the purposes of South Africa\u2019s Exchange Control Regulations.<\/p>\n\n\n\n If the Supreme Court of Appeal does not overturn Motha\u2019s ruling, it would be a significant setback for FinSurv.<\/p>\n\n\n\n In 2021, FinSurv came down hard on South African banks<\/a>, requiring them to restrict how people may purchase cryptocurrency from offshore exchanges.<\/p>\n\n\n\n As a result of the crackdowns, banks banned customers from using their payment cards to buy cryptocurrency from overseas exchanges.<\/p>\n\n\n\n FinSurv also told MyBroadband at the time that any transfer of cryptocurrency out of South Africa was a criminal offence<\/a> under existing exchange control regulations.<\/p>\n\n\n\n This includes transferring assets from your own self-hosted wallet<\/a> to individuals overseas or to decentralised exchanges.<\/p>\n\n\n\n Regulators further warned that \u201cstaking\u201d crypto assets could have tax and exchange control implications, though they did not clarify what those implications are.<\/p>\n\n\n\n MyBroadband asked FinSurv detailed questions about this in 2021. While it did provide feedback on the mechanics of what was permitted, it did not explain the legal basis for its stance.<\/p>\n\n\n\n When El Salvador declared Bitcoin legal tender in 2021, MyBroadband asked SARB whether this meant it would be considered foreign currency in South Africa.<\/p>\n\n\n\n This was based on a statement from regulators that the exchange control regulations define foreign currency as any currency that is legal tender elsewhere in the world but not in South Africa.<\/p>\n\n\n\n \u201cThe SARB has not taken a final position on the extent to which crypto assets may or may not fall within the definition of foreign currency as contemplated in the Exchange Control Regulations, 1961,\u201d it said at the time.<\/p>\n\n\n\n Notably, El Salvador reversed its decision in 2025 following pressure from the International Monetary Fund. While Bitcoin may still be used for payments, it is no longer legal tender.<\/p>\n\n\n\n SARB\u2019s argument now that cryptocurrency should be treated like money for exchange control purposes is a typical example of South African regulators wanting their bread buttered on both sides.<\/p>\n\n\n\n The Revenue Service wants to tax gains from cryptocurrency trades and investments at the highest possible rate, as if they were regular income.<\/p>\n\n\n\n However, SARB governor Lesetja Kganyago and other Reserve Bank officials have refused to even acknowledge them as \u201ccurrency\u201d.<\/p>\n\n\n\n As early as 2018, former SARB deputy governor Francois Groepe said that they didn\u2019t regard cryptocurrencies as currencies or securities.<\/p>\n\n\n\n In fact, they preferred that the term \u201ccryptocurrency\u201d not be applied to them and that people refer to them as \u201ccyber tokens\u201d<\/a>.<\/p>\n\n\n\nReserve Bank appeals \u201ccryptocurrency is not money\u201d ruling<\/h2>\n\n\n\n
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Having it both ways<\/h2>\n\n\n\n
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