REGULATION | South Africa’s High Court Says Bitcoin Should Be Treated as Capital Under the Capital Control Regime

South Africa’s High Court has ruled that Bitcoin should be treated as ‘capital’ under the country’s exchange control regime backing the South African Reserve Bank’s efforts to clamp down on unapproved cross-border crypto flows and ordering the forfeiture of roughly R6 million linked to the case.

The case in question involved cryptocurrency trader Square Mangundhla and Fungai Dangaiso to overturn a South African Reserve Bank (Sarb) forfeiture order linked to the transfer of Bitcoin worth about R182 million to foreign cryptocurrency exchanges. Mangundhla used is Luno account to transfer ~1,680 Bitcoin to a crypto exchange wallet registered outside South Africa.

The court however found that the transfers amounted to export of capital without Treasury approval which is against the Exchange Control Regulations. As a result, Bitcoin qualified as money and functions as a store of value and medium of exchange  convertible into conventional currency making the forfeiture lawful and ultimately dismissing the review application.

The judgment marks a significant shift from a landmark 2025 ruling that found cryptocurrencies fell outside South Africa’s decades-old Exchange Control Regulations because they were neither “currency” nor “capital,” creating what legal experts described as a regulatory gap. That earlier decision had limited the Reserve Bank’s ability to pursue forfeiture actions against crypto-related transactions and raised concerns that digital assets could be used to move value offshore without regulatory approval.

“The central question in this case is whether cryptocurrency (in this instance Bitcoin) constitutes either ‘money’ or ‘capital’ for the purposes of section 10 (1) (c) of the Exchange Control Regulations, 1961. I conclude that it is both,” Judge Wilson said.

Warning that excluding crypto from exchange control regulations would create a major loophole, he added:

“Were it otherwise, those controls would be virtually worthless, as anyone of any means who wished to take their money abroad could do so without Treasury oversight, simply by converting it into cryptocurrency and transferring it to a foreign cryptocurrency exchange.”

The latest ruling strengthens the Reserve Bank’s position as authorities seek tighter oversight of digital assets and cross-border capital movements. South African policymakers have already signaled plans to bring crypto assets formally within the country’s capital-flow management framework following concerns that the existing regulations were not designed for blockchain-based assets.

The case is the latest chapter in a broader legal battle over how cryptocurrencies should be classified under South African law. Previous court decisions highlighted the absence of explicit exchange-control rules for crypto assets prompting calls for legislative reform from regulators, banks, and legal experts.

By affirming that Bitcoin can constitute capital for exchange-control purposes, the ruling could set an important precedent for future enforcement actions involving crypto transfers abroad and accelerate efforts to integrate digital assets into South Africa’s formal financial regulatory framework.

Stay tuned to BitKE for updates into crypto regulation in Africa.

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