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As noted in our recent newsflash, National Treasury has published the draft Capital Flow Management Regulations, 2026 (“Draft Regulations”) for public comment. The Draft Regulations are intended to replace the Exchange Control Regulations, 1961 and, importantly, propose to bring crypto assets expressly within South Africa’s exchange control framework, supplementing existing oversight by the Financial Sector Conduct Authority (“FSCA”) and the Financial Intelligence Centre (“FIC”).
This is a significant shift from the current position, as discussed in a prior article. It is, however, not unexpected. This development is consistent with the broader regulatory direction in South Africa towards increased oversight of crypto assets, which we have also addressed previously in this article.
What do the Draft Regulations say?
Key definitions
The Draft Regulations propose the following definition of a “crypto asset”:
“a digital representation of value that—
(a) is not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility;
(b) applies cryptographic techniques; and
(c) uses distributed ledger technology”.
Crypto Assets as defined are proposed to be excluded from the definitions of “currency” and “foreign currency”, but included in the definition of “capital”. This distinction is important as Crypto Assets are not being treated as money in the traditional exchange control sense, but as a form of value capable of moving across borders.
It is, however, proposed that the definition of “financial assistance” be broadened to include Crypto Asset lending.
In addition, a new category of “authorised crypto asset service provider” (“ACASP”) is proposed, similar to the existing authorised dealer regime for foreign currency. This is defined by reference to a crypto asset service provider under the Financial Intelligence Centre Act (“CASP”), but with an added requirement that the CASP must be authorised by National Treasury to facilitate transactions involving the import or export of capital using Crypto Assets as a medium of exchange. In practical terms, ACASPs would sit at the centre of larger Crypto Asset transactions. It is not yet clear what process would need to be followed for a CASP to receive authorisation as an ACASP.
Draft Regulation 3 – Regulation of Crypto Asset transactions
It is proposed that direct restrictions apply to Crypto Asset transactions above a determined threshold. Specifically, it is proposed that no person other than an ACASP may buy, sell, borrow or lend crypto assets above that threshold (to be set by the Minister of Finance from time to time by notice in the Gazette) to anyone other than an ACASP, and every person intending to sell, borrow, or lend crypto assets must apply to an ACASP with supporting documentation. Crypto Assets acquired by persons other than ACASPs may only be used for the stated purpose, and if no longer required must be offered for sale back to an ACASP or National Treasury (who may purchase the Crypto Assets in Rand at the price at which it was sold to that person or at another price that they may determine).
In addition, ACASPs may be limited to specific approved transactions, under specific conditions, in terms of Draft Regulation 3(3).
Importantly, the current wording of Draft Regulation 3 does not limit its application to cross-border transactions.
Draft Regulation 4 – Cross-border regulation
Cross-border movement of Crypto Assets is squarely addressed. Draft Regulation 4 would prohibit, without National Treasury or authorized person permission, the taking, sending out or removal of Crypto Assets from South Africa, as well as certain payments in Crypto Assets to or for the benefit of non-residents. However, the Draft Regulations do not yet provide guidance on how these categories would apply in practice to specific Crypto Asset transactions, such as transfers of Crypto Assets from local exchanges to offshore exchanges.
Strict border-control provisions are proposed, providing for declarations, document production, search, seizure and possible forfeiture where Crypto Assets are suspected to be moved in contravention of the Draft Regulations. No guidance is provided on when a person would be regarded as having a Crypto Asset in their possession or control for these purposes, and what may be regarded as an intent to remove Crypto Assets from South Africa.
Draft Regulations 8 and 10 – Reporting and forced sale of Crypto Assets
Under Draft Regulation 8, a person in South Africa who (most relevantly) obtains possession of, or becomes entitled to sell, transfer or receive payment in Crypto Assets above the threshold must declare those holdings or rights to National Treasury or an authorized person within 30 days. Draft Regulation 8(3) and (4) would permit the purchase of those Crypto Assets by National Treasury, Authorised Dealers or ACASPs for market value consideration in Rands. Draft Regulation 8(5) prohibits the delay, prevention or frustration of payments in Crypto Assets by the person entitled to such payment.
Draft Regulation 10 repeats the requirement that every person in South Africa would be required to report, in writing together with relevant information, Crypto Assets above the threshold within 30 days after obtaining control, or possession or becoming entitled to sell, procure the sale of, or transfer of such assets, and would restrict the sale, transfer or disposal of such Crypto Assets without permission, which may be subject to conditions.
Draft Regulation 10(4) would deem any person who has been in South Africa since the publication of the Draft Regulations, to be a resident of South Africa for purposes of Regulation 10 until the contrary is proven.
Importantly, the current wording of Draft Regulations 8 and 10 does not limit their application to cross-border transactions.
Draft Regulation 12 – Prohibition on the export of ‘capital’
Draft Regulation 12 is the equivalent of the current Regulation 10, which prohibits the direct or indirect export of capital. As indicated above, Crypto Assets would fall within the definition of capital under the Draft Regulations.
Contraventions - Investigation, attachment, forfeiture, penalties and criminal sentences
As under the current Regulations, the Draft Regulations propose broad powers of investigation, attachment, forfeiture and the imposition of penalties and/or criminal sentences.
In addition, the Draft Regulations introduce administrative sanctions for authorized dealer and/or ACASPs.
What happens next?
For South Africans, the message is clear. While Crypto Asset transactions will not be banned, they will be highly regulated under the new Capital Flow Management (exchange control) regime.
If the Draft Regulations are enacted in materially similar form, this will have far-reaching consequences for the fintech industry, and potentially anyone with Crypto Asset holdings above the prescribed threshold.
While it is unclear whether there will be any in-person public consultations, written comments on the Draft Regulations are invited, with submissions due by 10 June 2026. This is an important window for businesses and individuals to consider the potential practical impact of the Draft Regulations and have their say.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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