In a swift and decisive move, the South African Reserve Bank (SARB) has filed an appeal to overturn a recent Pretoria High Court ruling that found cryptocurrencies are not subject to the country’s exchange control regulations. The appeal, submitted on June 3, 2025, marks the latest escalation in a legal battle that could reshape South Africa’s stance on crypto capital flows.
Context: The High Court’s Landmark Ruling
Just two weeks ago, the Pretoria High Court delivered a ruling in favor of Leo Cash and Carry (LCC), a now-liquidated company accused of violating exchange control regulations by transferring over 4,400 BTC (worth R556 million) from South African crypto exchange VALR to Huobi Global in Seychelles.
The court sided with LCC, stating that Bitcoin is not “money” or “capital” under South Africa’s current Exchange Control Regulations, thereby exempting the crypto transfers from oversight by SARB’s Financial Surveillance (FinSurv) department.
The case was brought by Standard Bank against multiple parties including SARB, the Minister of Finance, Nedbank, and LCC’s liquidators, as it sought to recover millions in loans made to LCC prior to its 2022 collapse.
SARB’s Appeal: Reinstating Regulatory Authority
SARB’s appeal argues that the court erred in law by:
- Failing to recognize cryptocurrencies as “money” or “foreign currency”, despite their use as cross-border mediums of exchange.
- Ignoring Regulation 22C, which empowers SARB to block or reverse transactions where exchange control violations are suspected.
- Overlooking the core purpose of capital controls to prevent the uncontrolled export of wealth from the country, regardless of the form it takes.
The central bank warned that the ruling creates a dangerous loophole whereby individuals and companies can move funds offshore via crypto assets without regulatory oversight, potentially undermining South Africa’s financial integrity.
“People could take out as much money as they wanted via crypto,” said Harry Scherzer, CEO of Future Forex, a local crypto and forex service provider.
“If South Africa wants comprehensive exchange control laws, crypto can’t be a backdoor for unmonitored capital flight. We’re effectively back to the status quo.”
The Stakes: What This Means for Crypto in South Africa
While Standard Bank partially succeeded in the original case, including overturning a R16.4 million forfeiture to SARB, it failed to recover R10 million transferred to Nedbank. SARB’s latest legal maneuver now seeks to restore its authority to classify crypto as part of capital flows, with implications for future crypto transactions, reporting, and remittances.
If the appeal succeeds, new legal precedents or even explicit amendments to South Africa’s exchange control laws could be introduced, directly targeting crypto assets as “capital” or “foreign currency equivalents.”
This would mark a major shift for the local crypto industry, which has operated in a regulatory gray area , subject to AML/CTF rules, but largely free from capital movement restrictions.
What’s Next?
With the appeal now filed, the case will likely move to the Supreme Court of Appeal, where South Africa’s judiciary will reassess whether crypto assets should fall under the umbrella of exchange control regulations.
In the meantime, crypto businesses and traders in South Africa remain in legal limbo, unsure whether the brief window of regulatory freedom for cross-border crypto use will remain open or snap shut under SARB’s renewed efforts.
This legal battle is more than just a courtroom scuffle , it’s a showdown over the future of crypto freedom in South Africa. While the High Court ruling may have empowered crypto entrepreneurs and cross-border traders, SARB’s pushback signals that the era of unregulated capital flight via blockchain may soon be over.
