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FreepikWhat the High Court decided
The High Court in Standard Bank v Sarb held that cryptocurrencies are neither “currency” nor “capital” under regulations 3(1)(c) and 10(1)(c) of the Regulations.
As these rules carry criminal and forfeiture penalties, the court applied the restrictive interpretation precedent from the Constitutional Court (CC) case of Democratic Alliance v African National Congress [2015]:
If there is any uncertainty about the ambit of a penalty provision, it must be resolved in favour of liberty.
In essence, when the state seeks to confiscate property or impose penalties, the law must be unambiguous. The court found there was a regulatory lacuna, as the Regulations say nothing about crypto assets. Any attempt to read them in would amount to judicial expansion of definitions through litigation.
The relevance of the Oilwell precedent
The High Court anchored its reasoning in Oilwell (Pty) Ltd v Protect International Ltd [2011], where the SCA ruled that intellectual property was not “capital” under the same regulation 10(1)(c).
The Oilwell decision led to the insertion of regulation 10(4) to include intellectual property rights within the definition of "capital" effective 8 June 2012, less than 15 months after the judgment was handed down. This was also the last amendment of the Regulations to date.
Bright Tibane, Andani Thovhakale and Tony Misago 13 Jun 2025 This historical precedent is instructive. When a new form of value emerges, the appropriate course is legislative amendment by Parliament rather than ad hoc judicial interpretive expansion of existing definitions.
Oilwell demonstrates that even assets with clear economic value (such as intellectual property) cannot be forced into a penal definition by analogy. The SCA in 2011 emphasised textual interpretation over policy imperatives, and the High Court has now followed this approach.
Why Shuttleworth does not help Sarb
Sarb’s appeal may rely on Shuttleworth v South African Reserve Bank [2015], which concerned Mark Shuttleworth’s challenge to a 10% exit levy on funds he moved abroad. The CC ultimately held that the exit levy was a regulatory measure lawfully imposed under the Regulations and not an unconstitutional tax.
Shuttleworth confirmed the constitutional legitimacy of exchange control as a policy instrument to protect the value of the currency. In contrast to the Standard Bank case, the Shuttleworth decision did not seek to expand the definitions of “money” or “capital.”
The context was purely civil and regulatory, not penal. No criminal liability or forfeiture was at stake, so the Democratic Alliance restrictive interpretation principle never came into play.
In Shuttleworth, everyone agreed that the funds were conventional currency, the question was whether the levy was constitutional. In Standard Bank, by contrast, the dispute is definitional: can Bitcoin, an intangible digital code, be "capital" under a 1961 text that predates computers?
Cor Kraamwinkel, Lenee Green, Lerato Lamola, Margaret Vermaak, and Mieke Vlok 4 Sep 2024 This distinction is fundamental. Constitutional validity (namely, that Parliament may regulate capital flows) differs from definitional scope (namely, what constitutes "capital"). The High Court determined that compelling cryptocurrency into that definition would be "strained and impractical".
The court observed the resulting absurdities: how would one "deposit" or "declare" cryptocurrency at a border? A purposive interpretation that leads to absurdity remains unlawful.
Required amendments remain "ongoing"
The 2014 Position Paper on Virtual Currencies issued by Sarb’s National Payment System Department was categorical:
The transfer of decentralised currencies in and out of South Africa is not supported by the Exchange Control Regulations; requests to trade in such currencies cross-border cannot be authorised by the Bank.
The paper also emphasised that virtual currencies "do not have legal tender status" and that "the Bank does not oversee, supervise or regulate the virtual-currency landscape".
Six years later, the 8 June 2021 Position Paper on Crypto Assets produced by the Intergovernmental Fintech Working Group (IFWG) comprising National Treasury, Sarb, FSCA, FIC, Competition Commission, NCR and SARS, repeated the point and proposed a legislative amendment:
Recommendation 5: "It is recommended that crypto assets remain without legal tender status and not be recognised as electronic money."Recommendation 12: “The Financial Surveillance Department of the Sarb should request the Minister of Finance to amend Regulation 10(4) to include crypto assets in the definition of ‘capital’ for the purposes of Regulation 10(1)(c).
Annexure 3 of the 2021 IFWG paper containing the implementation plan for recommendations confirmed that crypto assets were not to be classified as currency, legal tender or electronic money (Theme 3).
Further, National Treasury and Sarb were the responsible authorities to amend the Regulations "to include crypto assets in the definition of capital" in regulation 10(4) with an estimated timeframe of 9 to 12 months (Theme 5).
The IFWG paper reflects in 2021 the collective acknowledgement of South Africa's regulators (including Sarb) that crypto assets were not covered by the Regulations with planned legislative amendments to bring them within the regulatory framework by amending regulation 10(4).
Cor Kraamwinkel, Keith Veitch and Sean Franken 13 Jan 2021 The IFWG issued an update on the implementation of the recommendations in the 2021 paper on 8 November 2024. The status of Recommendation 5 is "Stance maintained" by "All IFWG members". The status of Recommendation 12 is "Ongoing", with responsible entities still "Sarb: FinSurv and National Treasury".
The Sarb position in the Standard Bank case is that crypto assets are "foreign currency" and included in "capital" in regulation 10(1)(c). This creates a fundamental contradiction. If crypto assets were already covered by the Regulations, no amendment to regulation 10(4) would be necessary and "Ongoing".
Implications of the SCA appeal
Should the SCA appeal be unsuccessful, FinSurv and National Treasury should implement the long-anticipated amendments to include crypto assets within the definition of capital under regulation 10(4), as recommended in the 2021 IFWG paper and confirmed as "Ongoing" in the 2024 update.
Should the appeal succeed, the High Court decision would be reversed. Crypto assets would be deemed to constitute "capital" under regulation 10(1)(c). Any subsequent amendment incorporating crypto assets into regulation 10(4) would constitute clarification of a legal position that had always been in effect.
The High Court decision remains suspended pending the SCA appeal outcome. This creates regulatory uncertainty, as the 2021 paper indicates crypto assets fall outside the definition of "capital". Yet financial institutions currently monitor discretionary allowances used for crypto asset purchases.
More importantly, the Oilwell precedent, the Democratic Alliance principle of legality, and the scope of Shuttleworth all converge on the same conclusion: judicial interpretation cannot substitute for legislative intervention. These cases lead to a conclusion that absent Parliamentary amendment of regulation 10(4), crypto assets are not within the ambit of the Regulations.
