Bitcoiners outraged by SA’s ‘biggest exchange control’ revamp in decades

Bitcoiners are outraged at proposed new exchange control regulations in South Africa that will criminalise anyone sending or receiving bitcoin (BTC) across border without permission.

“These regulations put us alongside North Korea in terms of financial freedom,” says one, who asked not to be named.

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“Here we have unelected bureaucrats making regulations, without parliament having any oversight.

“The question we, as South Africans, need to be asking is why we have exchange control regulations at all.

“The Currency and Exchanges Act was written in 1933, and what Treasury is proposing are sweeping regulatory changes under an act that’s nearly 100 years old. It’s time to get rid of this altogether.”

What this could lead to

The regulations pave the way for expropriation without compensation, akin to seizure by the US government of private gold in 1933 at $20.67 an ounce, according to one commentator.

“Once they have all your BTC on an exchange, as they plan to do, it’s very easy to expropriate without compensation.”

The draft regulations have galvanised the bitcoin community into public activism, with a website launched to gather comments for submission to National Treasury. What has also concerned the community is the short time frame until 18 May to submit comments.

The regulations effectively kill self-custody of BTC in SA, potentially criminalising those who want to opt out of the state-controlled financial system.

The draft regulations follow a court ruling in May 2025 which found crypto assets are not subject to exchange controls.

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Read: Sars provides clarity around crypto asset transaction reporting

The South African Reserve Bank immediately appealed this ruling, and local crypto exchanges continued treating cross-border crypto transactions is if they were illegal – which they were not.

These new regulations are intended to plug that legal lacuna.

What to expect

Among the proposed changes:

Exchanges control regulations are replaced with a new capital flow management framework intended to move away from preapprovals for foreign transactions to a risk-based model focused on reporting and surveillance of high impact and high risk cross-border transactions, and the combatting of illicit financial flows.
Crypto as capital: The definitions specifically include crypto assets or any intellectual property with monetary value which can be converted to money (but not immovable except property). This supposedly ends the debate as to whether BTC is currency or capital.
Crypto asset regulation: A new concept called “authorised crypto asset service providers” is introduced. These are licensed under the Financial Intelligence Centre Act, authorised by National Treasury, to facilitate import and export of capital, directly or indirectly using crypto assets.
Increased penalties: Anyone violating the regulations is liable to a fine of R1 million, imprisonment of five years, or both. Penalties can go higher where the offence relates to money, crypto assets or property.
Declaration of foreign assets: Anyone in SA must declare foreign and crypto assets within 30 days of obtaining control or possession, or even if they become entitled to sell or transfer these assets.
Restrictions on non-resident securities: As this primer from ENS makes clear, the draft regulations propose clearer definitions of “controlled security” and “non-resident”. Specific permissions from National Treasury or an authorised person would remain required for activities such as acting as nominee for non-residents or making entries in securities registers involving non-residents.

Objections

Members of the bitcoin community have already taken a cleaver to the proposed regulations, pointing to a potential legal confrontation if the regulations pass in their current form.

There is nothing stopping a border agent detaining a South African on suspicion of holding a BTC seed phrase in their head and demanding it be handed over.

The regulations are far too inclusive, says macro strategist Shiven Moodley: “It treats payment stablecoins, governance tokens, tokenised securities, tokenised debt, tokenised fund interests, utility tokens, and crypto collateral as though they are one regulatory object merely because they use distributed ledger technology. The definition is built around form, not function.”

This broad brush approach to regulation creates legal uncertainty and may accidentally misclassify instruments that should be regarded as “securities”, or other recognised property rights, adds Moodley.

“This matters because the same instrument can have more than one legal character. A tokenised share is not merely a ‘crypto asset’. It is also evidence of rights in an issuer.”

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Anti-constitutional?

As the regulations stand, some believe they violate constitutional protections of property – crypto assets being considered property in terms of Section 25(1) of the Constitution.

The proposed rules also potentially infringe free speech, since computer code – such as the code on which bitcoin operates – is widely deemed speech by the courts.

The regulations could also face legal trouble in that other, less restrictive means exist to achieve their objectives, which are not stated in the regulations.

This is one of the biggest regulatory changes in the SA financial space in decades,” says Carel van Wyk, CEO of Money Badger, a fintech enabling bitcoin payments through retail stores such as Pick n Pay.

“Hence the importance of approaching this with due consideration for the impact it will have. It needs very wide public participation.”

Ricki Allardice, CEO of Orange Global Services, believes the regulations could hurt the unbanked.

“About 11 million South African adults remain unbanked,” he says. “For these citizens, self-custodied crypto assets are a primary mechanism for savings, remittances, and participation in the global economy.

“Mandatory Crypto Asset Service Provider (Casp) intermediation – with associated fees, KYC requirements, and custodial counterparty risk – directly excludes this population.

“This outcome is inconsistent with National Treasury’s own financial inclusion mandate and South Africa’s Sustainable Development Goals commitments.”

Impact on exchanges

Frank Leonette, CEO of crypto exchange AfriDax, says the regulations have provoked extreme feelings in SA.

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“The crypto community is reacting strongly, with many feeling the regulations are extreme, and the overall response has been one of widespread concern.

“Private crypto holders may be forced to use regulated Casps against their will, reducing privacy in the process. There are also concerns around restrictions on self-hosted wallets, where users could require permission to move their own funds, an issue many find particularly worrying.

“When the government makes the formal financial system too restrictive, people don’t stop transacting, they simply move elsewhere,” he adds.

“This is how grey markets emerge and regulators lose sight of these transactions.”

The proposed rules could hurt exchange volumes, while positioning Casps as gatekeepers. That could mean higher fees for exchange users to compensate for the added costs of compliance.

Overall, the impact is severe and is likely to affect volumes on exchanges.

While the regulations position Casps as gatekeepers, they will need to redefine their service offerings and fee structures to accommodate the added cost of compliance.

Allardice notes that the regulations go beyond those in the EU, where hardware or software providers of non-custodial wallets are excluded from regulations, or the US Clarity Act, which allows for self-custody of digital assets.

As one comment in reaction to the regulations puts it: “The draft regulations, as currently framed, impose disproportionate restrictions on constitutionally protected property rights, undermine financial inclusion, and place South Africa out of step with international best practice.

“We urge National Treasury to adopt a targeted, proportionate framework that addresses legitimate financial crime concerns while preserving South Africans’ right to hold and transact with their own assets.”

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