Authored By: Taona Chiteme
Eduvos
This article will explore the nature of cryptocurrencies as a decentralised medium of exchange, and how this intersects with the legal landscape. Whilst the traditional landscape regulates the banking sector and financial services rendered by these institutions, South Africa does not have a single, standalone piece of legislation which regulates cryptocurrency (Freeman Law, 2023). This is largely because due to the extent of inequality, and the pervasive digital divide, digitally held and managed assets such as cryptocurrencies are still seen as new to the South African landscape, as well as largely inaccessible to the vast majority of the populous. In spite of this, as of late, the existing regulatory framework has broadened the classification of financial products within existing financial, tax, and anti-money laundering statutes such that cryptocurrencies, are now included. This is of particular importance, because it has introduced rigorous debate into how cryptocurrencies can be made more accessible for millions of South Africans to participate in the digital economy, and in turn, has introduced the topic of regulation. In South Africa, the Financial Sector Conduct Authority is the primary regulatory body that oversees the conduct of the overall financial markets. Recently, their scope has expanded to include necessary oversight of the cryptocurrency market. DLA Piper Africa (2026) specifically refers to the Financial Advisory and Intermediary Services Act 37 of 2002, which now officially recognises crypto assets as “financial products” for the purpose of oversight by the Financial Sector Conduct Authority. This statute recognises “financial products” in Section 1 as follows:
Securities and instruments, including shares in a company other than a “share block company” as per the Share Blocks Control Act 59 of 1980, debentures and securitised debt, any money-market instrument, any warrant, certificate, or instrument creating rights to dispose of or convert securities and instruments, any securities defined by the Securities Services Act of 2002.
The Act also refers to the following: a participatory interest in one or more collective investment schemes, as well as a foreign currency denominated investment instrument including a foreign currency deposit. Although cryptocurrencies are not tied to any currency, this also applies with due consideration of exchange controls. This statute additionally recognises financial services as per the Financial Services Board Act 97 of 1990, in turn recognising financial institutions such as crypto service providers, as well as banks, which furnish financial advice, render intermediary services, or exist to perform both functions. Majozi (2025) acknowledges that as of June 2023, any entity providing financial services associated with crypto assets such as crypto brokers, crypto exchanges, as well as crypto wallet providers, must be licensed as Crypto Asset Service Providers (CASP), in order to adhere to strict fit-and-proper requirements, operational framework standards, and undertake mandatory regulatory assessments. However, DLA Piper Africa (2026) additionally highlights that crypto miners, node operators, and entities dealing in Non-fungible Tokens (NFTs) are exempt from being compelled to register as CASPs, because they do not interact directly with consumers, thus presenting lower volatility. With due regard to the above facts, this article will thoroughly discuss the existing challenges presented before the South African government, through the relevant state organs regarding the topic of regulation of cryptocurrency assets, as well as currently available and future solutions to this dilemma.
South Africa’s Cryptocurrency Regulation Challenges
South African lawmakers are faced with the incredibly daunting task of protecting it’s long-established traditional financial system from the inherent volatility of cryptocurrency markets, whilst fostering a progressive, and innovative fintech environment. Unlike existing traditional currencies such as the Rand, cryptocurrencies are not publicly traded or regulated by a traditional stock exchange, nor are they backed by commodities, hence their inherent volatility arises from the lack of jurisdictional oversight and borderless nature. Reynders (2025) makes particular reference to the recent case of Standard Bank of South Africa vs the South African Reserve Bank & Others (2025) ZAGPPHC, in which the court ruled that cryptocurrency is not included in the statutory definitions of “capital” and “money”, which meant that moving crypto assets across borders was not subject to Exchange Control Regulations, thus limiting the reserve bank’s ability to scrutinize these transfers. Consequently, the South African Reserve Bank (SARB) has subsequently commenced with the drafting of a specific regulatory framework to oversee cross-border crypto asset transactions to close this legal loophole, which could potentially be exploited by unscrupulous actors. Furthermore, as the Intergovernmental Fintech Working Group, alongside various regulatory bodies continue to raise questions regarding the assembly of digital assets before the legal fold, several pervasive obstacles remain as follows:
Existing traditional South African legislation was not drafted to accommodate decentralized, intangible assets such as cryptocurrency holdings. Consequently, many existing statutes are viewed as outdated and thus unable to keep up with the borderless, fluid nature of cryptocurrency transactions. This makes it incredibly difficult for institutions such as the SARB to oversee capital flows in and out of South Africa’s borders. Dube (2019) recognises that crypto assets can simultaneously act as a medium of exchange, investment tool, and wealth building utility, thus intersects with multiple areas of the law, such as Consumer Protection, Property Law, Taxation, as well as Securities legislation. With due consideration of this, despite CASPs being recognised as accountable institutions for their own legal protection, there are particular concerns that have been raised regarding the difficulty of enforcing Anti-Money Laundering and Counter-Terrorist Financing protocols. Masthead (2024) adds that South Africa maintains strict exchange controls to protect the general flow of capital across it’s borders to protect the economy. However, as of late, the Currency and Exchanges Act is yet to be amended to prevent individuals from using digital assets as part of capital flight. Holders of cryptocurrency assets hold private keys to their assets rather than a centralised exchange.
The recently tabulated requirements for all CASPs to be licensed by the Financial Advisory and Intermediary Services Act imposes a rather steep barrier to entry for emerging crypto startups. Multiple compliance requirements such as rigorous fit-and-proper assessments, regulatory exams, and implementation of sophisticated risk assessment tools, could pose a costly barrier to entry which risks stifling local entrepreneurs, pushing them to simply relocate to jurisdictions with more relaxed regulatory regimes.
Furthermore, due to the already exacerbated digital divide, less tech-savvy and financially literate South Africans are left susceptible to market manipulation, cybercrimes, and other unscrupulous actors looking to exploit vulnerable citizens for their own enrichment.
South Africa’s proposed solutions to cryptocurrency regulations
South African regulators and policy drafters have collectively agreed that a firm and decisive approach needs to be taken to develop a comprehensive, phased regulatory framework. This follows the realisation that issuing early cautionary warnings to individuals and crypto service providers is insufficient. State institutions such as the South African Reserve Bank (SARB), Financial Sector Conduct Authority (FSCA), Financial Intelligence Centre (FIC) and the South African Revenue Services (SARS) have collectively assembled to establish the Intergovernmental Fintech Working Group (IFWG) to coordinate these efforts to regulate the service providers. As of late, these are the existing solutions that are in place to manage the cryptocurrency asset ecosystem:
- Whilst there is no specific legislation in place to regulate cryptocurrencies, lawmakers have currently focused on expanding the definitions within existing laws to include CASPs
- Market Conduct and Licensing: Lightspark.com (2025) re-emphasises that anyone rendering advice or intermediary services regarding cryptocurrency assets must be registered as a CASP by the Financial Sector Conduct Authority, due to the legally protected status of crypto assets as “financial products”.
- Anti-Money Laundering: The Financial Intelligence Centre Act specifically delineates CASPs as “accountable institutions”, compelling them to register with the Financial Intelligence Centre, perform rigorous Know Your Customer (KYC) checks, and monitor suspicious activity.
- Taxation: SARS (2021) emphasises the treatment of crypto assets as intangible assets, thus taxing them under standard income tax protocols. SARS also assigns two different tax regimes: gross income tax for active traders, and Capital Gains Tax for long-term investors.
- The IFWG Innovation Hub: To foster safe development, the IFWG established an Innovation Hub, featuring what has been referred to as a “Regulatory Sandbox”, allowing fintech startups to test new crypto and blockchain products under regulatory oversight, without having the burden of statutory compliance being imposed on them (Ifwg.co.za, 2026).
South African regulators have proposed several upcoming legislative updates lined up to mitigate existing loopholes as follows:
- Dedicated Cross-Border Transfer Framework: A brand new regulatory framework specifically for cross-border crypto transactions is on the cards following the Standard Bank vs SARB High Court ruling (Digital Watch Observatory, 2025). This is envisaged to set reporting duties and conditions for CASPs to prevent illicit capital flight.
- Integration into the COFI Bill: De Villiers et al (2022) highlights plans by the FSCA to migrate the regulation of crypto assets away from existing legislation such as the Financial Advisory and Intermediary Services (FAIS) Act into the proposed Conduct of Financial Institutions (COFI) Bill. This bill aims to serve as the primary legislation for market conduct, and seeks to capture a broader spectrum of crypto-related activities.
- Institutional Exposure Limits: Regulatory bodies have proposed the explicit prohibition of collective investment schemes and pension funds from being exposed to crypto assets due to their inherent market volatility.
- Central Bank Digital Currencies (CBDCs) and Stablecoins: SARB is said to be researching the development of a state-backed digital currency as a more stable alternative to decentralized, highly volatile cryptocurrency assets.
Conclusion
As of late, the future trajectory of cryptocurrency regulation in South Africa requires an evolution from mere cautionary warnings to a highly organised, and structured rollout of policies that will integrate cryptocurrency into the formal financial sector. As explored throughout this article, there is currently a mismatch between inherently decentralised, borderless, anonymous nature of digitally held assets, and existing traditional legislation. Regulators currently struggle with applying existing statutes such as the Currency and Exchanges Act, Financial Intelligence Centre Act, and Financial Advisory and Intermediary Services Act, amongst other traditional policies, to assets such as cryptocurrencies which are not confined to any jurisdictional boundaries. This creates friction such that it is difficult to police unregulated capital outflows, illicit financing of certain groups, and the “Know Your Customer” rule.
With due consideration of the above, South Africa finds itself at a particular intersection, whereby policymakers have to balance existing macroeconomic stability or the economy with pioneering a financial and technological revolution. Recently established regulatory committees such as the Intergovernmental Fintech Working Group, alongside lawmakers have chosen not to stifle the local fintech ecosystem by imposing a rigid, standalone legislation as a blanket approach, but rather, to incorporate existing financial legislation proactively. This has been achieved as of late, by officially recognising crypto assets as financial products, designating Crypto Asset Service Providers as accountable institutions officially, and developing the Crypto Asset Reporting Framework, to mitigate the unregulated exploitation of legal loopholes. Furthermore, the South African Reserve Bank is actively developing a framework that oversees cross-border transactions, and plans to integrate the crypto market to signal a progressive, evolving legal landscape.
With due consideration of the above facts explored throughout this article, the development of South Africa’s cryptocurrency framework requires statewide cooperation and alignment with internationally coordinated best practices. While the recently tabulated compliance burden is rather steep for local crypto service providers, this regulatory hurdle should be seen less as a form of marginalisation, but rather as necessary to protect the consumer who engages with these services, thus building institutional trust. Amongst the legal fraternity, the development of crypto oversight requires that financial legislation become more elastic to ensure that South Africa is also able to compete globally in this sphere of the financial system.
Reference(S):
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DLA Piper Africa. (2026). FSCA Update on Licensing and Supervision of Crypto Asset Service Providers | DLA Piper | South Africa . [online] Available at: https://www.dlapiperafrica.com/en/south-africa/insights/2026/FSCA_Update_on_Licensing_and_Supervision_of_Crypto_Asset_Service_Providers?hl=en-ZA [Accessed 23 Feb. 2026].
Financial Advisory and Intermediary Services Act 37 of 2002. Available at: https://www.gov.za/sites/default/files/gcis_document/201409/a37-020.pdf
Majozi, A. (2025). Cryptocurrency Regulation in South Africa . [online] michalsons.com . Available at: https://www.michalsons.com/blog/cryptocurrency-regulation-in-south-africa/79721?hl=en-ZA [Accessed 23 Feb. 2026].
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