A significant new High Court judgment may reshape the legal treatment of crypto assets in South Africa’s exchange control framework. In Mangundhla v South African Reserve Bank, handed down on 1 June 2026, the Gauteng Division, Johannesburg held that cryptocurrency, in this instance Bitcoin, is both “money” and “capital” for purposes of regulation 10(1)(c) of the Exchange Control Regulations, 1961 and the Currency and Exchanges Act 9 of 1933. The court went further and said that the contrary decision in Standard Bank of South Africa v South African Reserve Bank 2025 (5) SA 289 (GP) (“Standard Bank”) was “clearly wrong”.
Until now, the legal treatment of crypto assets under South Africa’s exchange control regime has been marked by uncertainty: Motha J found in the Standard Bank case that cryptocurrency is neither “money” nor “capital”, however, the 2026 draft Capital Flow Management Regulations (pending promulgation by Treasury) (the “Draft Regulations”) has contradicted the Standard Bank judgement by including crypto assets within the definition of “capital”. The Mangundhla judgment cuts directly through that uncertainty. Wilson J held that Bitcoin is a financial asset capable of holding value and being used as a medium of exchange and is therefore “capital” under regulation 10(1)(c). The court also held that Bitcoin is “money” for forfeiture purposes, reasoning that it can be converted into fiat currency, used directly to purchase goods and services, and functions as both a store of value and a medium of exchange.
The facts were substantial. The first applicant used his own and the second applicant’s Luno accounts to move just under 1,680 bitcoin, worth just under ZAR182 million, to wallets accessible only through cryptocurrency exchanges registered outside South Africa. The Reserve Bank treated that conduct as the export of Bitcoin and its rand value contrary to regulation 10(1)(c), and the Deputy Governor ordered the forfeiture of just under ZAR6 million in Bitcoin assets and funds held in the applicants’ bank and Luno accounts.
The court accepted that approach. It held that once the Bitcoin was credited to wallets on foreign exchanges, the capital had been exported. Importantly, the court rejected the argument that export required proof that the wallet holders were resident abroad or that the Bitcoin had been converted into foreign currency in a foreign jurisdiction. In the court’s view, once the Bitcoin was placed beyond the Reserve Bank’s jurisdiction, it had been exported. The fact that the wallets could be accessed from within South Africa did not change that conclusion.
The reasoning is notable for its practical tone. The judgment is firmly purposive. It emphasises that the exchange control regime exists to regulate and, where necessary, curb the outflow of capital, and warns that to exclude Bitcoin (and possibly any digital form of currency) from that framework would render those controls “virtually worthless”, because capital could simply be moved offshore by converting it into cryptocurrency and transferring it to foreign exchanges. The court respectfully cautioned against Motha J’s reasoning in Standard Bank that Bitcoin’s intangible or technological character placed it beyond the Regulations, stating that such submissions involved a degree of “magical thinking” about the nature of money and capital.
For the crypto industry and its advisers, the implications are serious. The judgment suggests that, at least where Bitcoin is concerned, South African courts may be willing to treat crypto assets functionally rather than formally when interpreting older financial legislation. That has immediate relevance not only for exchange control, but also for forfeiture risk, transaction structuring and the treatment of offshore wallet or exchange arrangements. The judgment also strengthens the policy direction already visible in Treasury’s Draft Regulations, which seek expressly to bring crypto assets within the exchange control framework.
The case also matters because it narrows the room for arguments based on crypto exceptionalism. The court’s approach is clear: if an asset behaves like a financial asset, can hold value, and can be used as a medium of exchange to move capital beyond South Africa’s borders, then its technological novelty will not by itself place it outside the law’s reach. That is likely to resonate beyond this case.
There are, of course, limits to what the judgment decides. The court expressly left open whether the transactions also breached regulations 3(1)(a) or 3(1)(c), and its reasoning is focused primarily on Bitcoin in the context of regulation 10(1)(c). But even on that narrower footing, the judgment is important. It establishes a strong judicial basis for treating Bitcoin as capital under the exchange control regime, and as money for forfeiture purposes.
A significant caveat, however, is that the Mangundhla judgment does not eliminate legal uncertainty - in some respects, it deepens it. South Africa now has two competing High Court judgments and interpretations on the same point of law. Whilst as a general practice, the later judgement is usually preferred, neither decision technically nor legally binds the other division. There is therefore no authoritative resolution of the point. Market participants are therefore left in the uncomfortable position of having to structure their affairs on the basis of conflicting authority at the same level of the judicial hierarchy. Until an appellate court settles the question, or the Draft Regulations are promulgated and place the matter beyond doubt as a matter of legislation, the legal status of crypto assets under the exchange control framework remains genuinely contested.
The broader message is that South Africa’s legal treatment of crypto assets is becoming less conceptual and based more on the function these assets perform. Courts and regulators appear increasingly concerned with what crypto can do in practice, especially in relation to value transfer and capital movement, rather than whether it fits neatly into legacy labels. For market participants, that makes careful structuring and regulatory analysis all the more important.
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Read the original publication at ENS
