Crypto In Trust: Can A South African Trust Hold Digital Assets?

As crypto assets become increasingly more common amongst South African investors, families, entrepreneurs and fintech businesses, a new question frequently arises: can crypto be placed into a trust, and if so, what are the rights and duties of such an arrangement under South African law?

The short answer is that there is no immediate reason why a South African trust could not hold crypto assets, provided that the trust deed is properly drafted, the trustees are empowered to acquire and administer those assets, and the trust is managed within the broader regulatory framework applicable to crypto assets, financial services, tax, anti-money laundering and exchange control. The salient question is not whether crypto can be held in a trust, but rather what regulatory consequences follow once a trust begins to hold, manage or invest in crypto assets for the benefit of others.

This distinction matters. A private family trust holding crypto assets as part of an estate planning or asset protection structure is quite different from a vehicle sold to members of the public as a pooled crypto investment fund. Both may use the word “trust,” but they raise vastly different legal and regulatory issues.

At a basic trust law level, a crypto trust would need to be set up under the Trust Property Control Act, 1988. The trustees would hold and manage the trust property for the benefit of the beneficiaries according to the trust deed. In that sense, crypto assets can be treated like any other trust asset that can be owned, transferred and valued. However, crypto assets also bring practical problems that ordinary trust property does not. Trustees need to consider who controls the private keys to the crypto wallets, where wallets are held, how transactions are approved, how assets are valued, and what happens if a trustee dies, resigns, loses access credentials or acts against the interests of the beneficiaries of the trust or without proper authority.

Those issues are not merely technical details. They go to the heart of the fiduciary administration of a trust. Where the asset is a volatile and digitally held crypto asset, the requisite management would require clear governance rules dealing with custody, security, valuation, record keeping, approved trading, risk appetite and reporting to beneficiaries.

The trust deed therefore becomes critical. A standard trust deed may not be enough if it does not expressly allow the trustees to acquire, hold, dispose of, lend, exchange crypto assets. It should also make provision for whether trustees may use local or foreign crypto asset service providers (“CASPs”), whether they may hold assets in self-custody, whether speculative trading is permitted, and what level of diversification or risk control is expected. Without explicit clarity, trustees may find themselves exposed to disputes from beneficiaries if crypto assets are lost, mismanaged or invested in a way that falls outside the purpose of the trust.

The regulatory picture becomes more complex where the trust is not merely a private holding structure but is used to collect money or crypto assets from multiple investors. Under the Collective Investment Schemes Control Act, 2002 (“CISCA”), a collective investment scheme can arise where members of the public are invited or allowed to invest money or other assets in a portfolio, hold participatory interests and share in the risk and benefit of that portfolio. The definition is deliberately broad and applies “in whatever form.”

This is an important warning point. A structure cannot avoid collective investment scheme regulation simply by calling itself a trust. If the commercial substance is that multiple investors contribute funds or crypto assets to a pooled portfolio and share proportionately in the returns, the structure may need to be assessed under CISCA. The legal consequences may therefore be far more significant than ordinary trust administration.

The Financial Advisory and Intermediary Services Act, 2002 (“FAIS”) is also relevant. The Financial Sector Conduct Authority (“FSCA”) has declared crypto assets to be financial products under FAIS by way of General Notice 1350 of 2022 published in Government Gazette 47334. This means that persons providing advice or intermediary services in relation to crypto assets may need appropriate authorisation as financial services providers (“FSPs”) unless an exemption applies. A trustee acting purely in the capacity for a private trust may be in a different position from a business that markets, advises on or intermediates crypto investments for clients. However, once a person manages, recommends or facilitates crypto investment activity as a business, FAIS consequences must be carefully considered.

Anti-money laundering obligations are equally important. A person carrying on certain CASP activities for or on behalf of a client is an accountable institution under Schedule 1 to the Financial Intelligence Centre Act, 2001 (“FICA”). The Schedule 1 crypto asset definition refers to a digital representation of perceived value that can be traded or transferred electronically and used for payment or investment purposes, excluding fiat currency (i.e. government-issued currency such as the South African rand that is not backed by a commodity but by the issuing government) and securities as defined in the Financial Markets Act, 2012. Depending on the structure, trustees, administrators, exchanges, custodians or advisers may therefore need to consider customer due diligence, risk management, record keeping and reporting duties under FICA.

Trusts themselves are also subject to increased transparency duties. The 2023 amendments to the Trust Property Control Act introduced beneficial ownership reporting requirements for trusts, requiring trustees to record and lodge prescribed beneficial ownership information with the Master of the High Court. These amendments are particularly applicable as crypto assets are often linked to privacy and pseudonymity, while South African trust law is moving in the opposite direction - toward greater transparency of control and benefit.

Tax is another key consideration. SARS treats crypto assets as assets of an intangible nature and applies ordinary income tax principles to crypto transactions, meaning that gains or losses may be taxed on revenue or capital account depending on the facts. All South African trusts must register with SARS and file annual trust tax returns, whether active or passive, and tax consequences may arise when crypto assets are acquired, disposed of, vested in beneficiaries or distributed. From 1 March 2026, South Africa’s Crypto-Asset Reporting Framework also brought in reporting duties for certain CASPs, further reducing the possibility of crypto activity escaping tax visibility.

Exchange control must also be considered where the trust acquires crypto assets offshore, transfers value across borders, uses foreign platforms or holds assets in foreign wallets. The South African Reserve Bank (“SARB”) has expressed that crypto assets are not legal tender in South Africa, and that legal protection or recourse depends on general common-law principles. National Treasury’s draft Capital Flow Management Regulations also expressly seek to address gaps relating to cross-border crypto asset transactions. A trust structure should therefore not be used to obscure the externalisation of value or to aggregate individual allowances in a manner inconsistent with exchange control requirements.

Ultimately, it is indeed possible to hold crypto assets in a trust as a South African investor, however one must ensure the nuanced requirements are met. A properly structured private trust may hold crypto assets, but the trust deed, trustee powers, custody arrangements, tax treatment and reporting duties must be carefully aligned. A pooled or publicly marketed crypto trust fund raises far more serious regulatory questions and may trigger CISCA, FAIS, FICA, as well as tax and exchange control consequences.

An entity merely labelled as a “trust” does not determine the regulatory outcome. The central questions are what the structure does, who it is offered to, who controls the assets, who benefits from the assets and whether the arrangement is geared towards private wealth planning or a regulated investment business in substance.

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.