South Africa’s National Treasury has published draft Capital Flow Management Regulations that would bring crypto assets directly under the country’s exchange control framework for the first time. The proposed rules aim to strengthen oversight of cross-border crypto transactions, introduce asset declaration requirements and establish new compliance obligations for individuals and service providers.
The regulations, made under section 9(1) of the Currency and Exchanges Act, 1933, would repeal and replace the existing framework introduced in 1961. Although crypto assets would remain legally distinct from currency and foreign currency, the draft would classify them as capital, allowing authorities to regulate their movement across South Africa’s borders.
A key feature of the proposal is the introduction of a new category of authorised crypto asset service providers. These providers, already recognised under the Financial Intelligence Centre Act, would need specific authorisation from National Treasury to facilitate transactions involving the import or export of capital through crypto assets. Their role would be comparable to that of authorised dealers in foreign exchange and gold.
The draft would also impose restrictions on certain crypto transactions, including buying, selling, borrowing and lending above thresholds yet to be determined. Relevant transactions would generally need to be conducted through authorised providers or receive approval from Treasury or another authorised person. Individuals would also be required to provide information demonstrating compliance and use crypto assets for the purposes stated in their original applications.
Cross-border transfers would face additional scrutiny. Sending crypto assets out of South Africa, carrying them across the border or making crypto payments to non-residents would generally require permission, subject to prescribed thresholds and exceptions. Travellers could also be required to declare their crypto holdings when entering or leaving the country.
The proposal includes written disclosure requirements for individuals holding or becoming entitled to crypto assets above a prescribed threshold. Declarations could require information about how and when assets were acquired, where they are held and whether they relate to foreign liabilities. Certain declared assets could not be sold or transferred without permission.
Enforcement provisions would grant authorities powers to search individuals and consignments, seize assets suspected of breaching the regulations, attach crypto assets and block accounts. In certain circumstances, assets could be forfeited to the National Revenue Fund following the prescribed notice process and a 90-day waiting period before disposal. Individuals controlling forfeited assets could also be required to provide passwords, PINs or access codes needed to access them, with decisions remaining subject to judicial review.
Crypto asset service providers that breach the proposed requirements could face administrative sanctions, including fines, public censure, suspension or revocation of authorisation, and the disqualification of directors or senior staff. Criminal penalties could include fines of up to R1 million, imprisonment for up to five years, or both. Where an offence involves crypto assets or other property, the fine could instead match the value of those assets if higher.
The draft also provides a potential route for individuals to disclose certain past contraventions involving crypto assets treated as foreign property and seek regularisation through a sworn affidavit. Any relief could involve a levy or penalty and, in some cases, the repatriation of assets. This option would generally not be available to people already under investigation or prosecution, unless Treasury exercises its discretion.
Several details remain outstanding, including the thresholds that would trigger many of the proposed obligations. These would be determined by the Minister of Finance through notices in the Government Gazette, alongside forms, prescribed periods and other conditions. The regulations remain in draft form and would take effect upon publication in the Government Gazette, meaning the final requirements could change before implementation.
