Authored By: Tsiane Lekekela
Eduvos
Abstract
South Africa’s banking sector has been navigating ways to adapt and implement advanced technology in its operations, especially through innovative payment methods. The evolution of modern banking has resulted in the development of cryptocurrencies as a new method of payment across the world. Cryptocurrencies are distinct in that they do not rely on central banks to manage their value and transactions. Although cryptocurrencies appear convenient for users, the problem lies in the legal gap within the law that protects users who engage in crypto transactions — transactions that are final and irrevocable — which presents a significant challenge when navigating the legal landscape of cryptocurrencies in South Africa.
Introduction
Cryptocurrency was established on 3 January 2009 with the development of Bitcoin by Satoshi Nakamoto. He created the open-source software and mined the first blockchain, called the genesis block, which gave rise to the decentralised peer-to-peer electronic cash system.1 The blockchain is the system that manages crypto transactions. It operates similarly to a ledger that records all transactions on multiple computers simultaneously, which promotes transparency and makes the system difficult to tamper with.2 Cryptocurrencies facilitate international dealings, operate quickly, and are not limited by regular banking hours. The system is highly secure: each coin owner holds a private key — a digital lock and key — that allows them to access their funds safely.2 Cryptocurrencies are self-regulated by specific protocols, such as the Bitcoin Protocol.2 The downside of crypto is that the market is volatile, as cryptocurrency values change rapidly, posing a risk for commercial agreements that rely on fixed pricing.2
Cryptocurrency was introduced in South Africa in 2013, which led to the development of Luno, a locally accessible exchange.3 Luno was originally known as BitX in 2013 and represented the onset of mainstream crypto access in South Africa.3 Although Bitcoin was specifically designed to function as an instrument of payment and a payment system, crypto assets vary considerably in terms of their design.4 Some operate as a payment system for cross-border or domestic use, and others function as a payment system, an international remittance instrument, an investment vehicle, a means to raise capital, a security, or as a combination of these functions.4 Despite its apparent convenience, cryptocurrency presents a range of issues in South Africa relating to tax, exchange control, money laundering, terrorist financing, intermediary services, financial advice to clients, and consumer protection.4 The objective of this article is to investigate these issues and their legal implications in South Africa.
Regulatory Framework of Cryptocurrencies in South Africa
The Financial Intelligence Centre Act 38 of 2001 (FICA) applies to accountable institutions listed in Schedule 1 of FICA.5 These institutions are required to register with the Financial Intelligence Centre. In terms of Schedule 1 of FICA, an accountable institution includes any person carrying on the business of: exchanging crypto assets for fiat currency; exchanging one type of crypto asset for another; executing transactions that transfer a crypto asset from one address to another; safekeeping a crypto asset; or providing financial services relating to an issuer’s offer or the sale of a crypto asset.5
Crypto assets are declared as financial products under the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act).6 In terms of FICA, a crypto asset is a digital representation of perceived value that is traded or transferable electronically via the internet.5 The internet is considered a medium of exchange, unit of account, store of value, and/or an investment instrument in this context.7 Crypto asset service providers are required to implement measures to prevent money laundering.7
In terms of the FAIS Act, a crypto asset is a digital representation of value that is not issued or governed by the central bank of South Africa (the South African Reserve Bank), but that is traded and transferable electronically by natural or legal persons for the purposes of payment and/or investment.6 In terms of the South African Reserve Bank Act 90 of 1989, money is defined as legal tender — that is, a note of the bank or an outstanding note of the bank for which the bank has assumed liability in terms of section 15(3)(c) of the Currency and Banking Act 31 of 1920.4 Legal tender is limited to banknotes and coins issued by the Reserve Bank; accordingly, from a legal perspective, crypto assets are not recognised as legal tender.4
This position was affirmed in the landmark judgment of Standard Bank of South Africa v South African Reserve Bank and Others [2025] ZAGPPHC 481, where Motha J ruled that cryptocurrencies do not fall under the definition of “money” and “capital” within the Exchange Control Regulations, and that the Exchange Control Regulations of 1961 cannot be applied to cryptocurrency transactions.8
The Protection of the Consumer
Transacting in crypto presents numerous issues that are often overlooked owing to its apparent convenience, including significant consumer risks and consumer protection concerns.2 Consumers frequently invest in risky products and services without full knowledge of those products, which are often unsuitable to their financial needs.4 This vulnerability also makes consumers susceptible to being defrauded by bad actors running scams that purport to relate to legitimate crypto asset products.4 It is well-documented that cryptocurrency has been used to facilitate illicit activities such as tax evasion, money laundering, and terrorism financing. Accordingly, consumers require meaningful protection from the risks associated with buying, investing in, and using cryptocurrencies.4
The South African Reserve Bank and Cryptocurrencies
The South African Reserve Bank has sought to regulate cryptocurrencies through directives and regulations as outlined above.2 In a paper published by the SARB, the Bank acknowledged the significant challenges involved in regulating crypto transactions. The concerns raised included the absence of a comprehensive regulatory legal framework governing crypto transactions, which heightens the risks associated with enforcing the principles of finality and irrevocability in payment systems.2 Furthermore, there is no regulatory protection that would compensate the owner or user of a cryptocurrency for any loss suffered.2 The navigation of applicable laws and the gathering of evidence in relation to a transaction can become an extraordinarily difficult task.2 The exchange regulations do not govern the transfer of cryptocurrencies into or out of South Africa, which means that any cross-border exchanges are not authorised by the SARB.2
Conclusion
The rapid growth in the use of cryptocurrency in South Africa calls upon crypto service providers, investors, and financial institutions to seek professional guidance on compliance — particularly with respect to international transactions. The South African Reserve Bank and the South African government should investigate the implementation of dedicated legislation for cryptocurrency, as it represents an emerging method of payment in the financial sector. Compliance must be ensured by users, and greater protection must be afforded to them, especially with regard to the principles of finality and irrevocability of transactions. Legal practitioners must also familiarise themselves with developments in crypto to prepare for the complex legal questions that are becoming increasingly common as our financial lives become more digitised. This knowledge will equip them to draft contracts involving cryptocurrencies, manage fraud disputes, and contribute meaningfully to the regulatory discourse surrounding these technologies.
Reference(S):
Cases
Standard Bank of South Africa v South African Reserve Bank and Others [2025] ZAGPPHC 481 (Motha J).
Legislation
Currency and Banking Act 31 of 1920 (RSA).
Financial Advisory and Intermediary Services Act 37 of 2002 (RSA).
Financial Intelligence Centre Act 38 of 2001 (RSA).
South African Reserve Bank Act 90 of 1989 (RSA).
Journals
Hamukuaya N.H. “The Development of Cryptocurrencies as a Payment Method in South Africa” 24 PELJ 1 (2021).
Internet Sources
Gregerson E. “Cryptocurrency — Digital Asset” Britannica (12 November 2024) https://www.britannica.com/money/cryptocurrency.
Njinu K. “Bitcoin Adoption in South Africa: An End User Perspective” UCT Open Access Repository (2021) https://open.uct.ac.za.
South African Reserve Bank “FAQs About Crypto Assets” SARB (2025) [URL to be updated — current link is unstable; author to replace with direct SARB URL].
Van den Berg A. “CMS Expert Guide to Crypto Regulation in South Africa” CMS Law (25 June 2025) https://cms.law/en/int/expert-guides/cms-expert-guide-to-crypto-regulation.
Footnote(S):
1 Erik Gregerson, “Cryptocurrency — Digital Asset,” Britannica (12 November 2024), https://www.britannica.com/money/cryptocurrency.
2 Hamukuaya N.H., “The Development of Cryptocurrencies as a Payment Method in South Africa,” 24 PELJ 1, 2 (2021).
3 Kimani Njinu, “Bitcoin Adoption in South Africa: An End User Perspective,” UCT Open Access Repository (2021), https://open.uct.ac.za.
4 South African Reserve Bank, “FAQs About Crypto Assets,” SARB (2025) [link to be updated by author].
5 Financial Intelligence Centre Act 38 of 2001 (RSA).
6 Financial Advisory and Intermediary Services Act 37 of 2002 (RSA).
7 Andre van den Berg, “CMS Expert Guide to Crypto Regulation in South Africa,” CMS Law (25 June 2025), https://cms.law/en/int/expert-guides/cms-expert-guide-to-crypto-regulation.
8 Standard Bank of South Africa v South African Reserve Bank and Others [2025] ZAGPPHC 481 (Motha J).
