Square Mangundhla v South African Reserve Bank and Others

Full case name: Square Mangundhla v South African Reserve Bank and Others

Citation: [2026] ZAGPJHC 579

Court: Gauteng Division of the High Court of South Africa, Johannesburg

Date of judgment: 1 June 2026

Bench: Wilson J (single judge)

INTRODUCTION

For years, the South African cryptocurrency market didn’t know where they stood under the law. Because the 1961 Exchange Control Regulations were written long before Bitcoin existed, it was never clear whether they applied to digital assets at all. This uncertainty was recently addressed in the Gauteng High Court’s landmark decision in Mangundhla v South African Reserve Bank. In this ruling, the Court held that cryptocurrency can be classified as both “money” and “capital” for the purposes of the Regulations. Consequently, the Court determined that the transfer of Bitcoin to offshore digital wallets without explicit Treasury authorization constitutes an unlawful export of capital. This finding stands in direct opposition to a 2025 High Court judgment, resulting in a direct conflict that will almost certainly necessitate intervention from an appellate court. This summary explores the Court’s legal reasoning, isolates the ratio decidendi, and critically assesses how this decision reshapes the enforcement of exchange control laws within the South African financial sector.

FACTS OF THE CASE

The applicant, Square Mangundhla, operated as a cryptocurrency trader, maintaining an active trading history between 2015 and 2017. Between January 2018 and March 2020, Mangundhla moved approximately 1,680 BBitcoi, with an estimated value of R182 million; from his personal account at the Luno exchange to various foreign-based digital wallets. To facilitate these transactions, he also utilized the Luno account of an acquaintance, Fungai Dangaiso, who was not herself involved in the crypto market. Crucially, Mangundhla proceeded with these transfers without seeking the necessary clearance from the South African Reserve Bank (SARB) or the National Treasury, which the Exchange Control Regulations mandate for the export of capital.

Following these actions, the Reserve Bank’s Deputy Governor invoked Regulation 22B to issue a forfeiture order, resulting in the seizure of approximately R6 million in assets. Challenging the legality of this forfeiture, Mangundhla sought a High Court review to have the order overturned. His primary contention was twofold; first, he asserted that the Exchange Control Regulations were never intended to govern digital assets; second, he argued that moving Bitcoin to an offshore wallet did not meet the definition of “exporting” capital under the existing regulatory framework. In response, the South African Reserve Bank maintained that the forfeiture was entirely lawful, arguing that once the functional nature of cryptocurrency is properly analyzed, it falls squarely within the reach of the Regulations.  

LEGAL ISSUES

The Court identified three primary legal questions for determination:

Issue 1: Whether Bitcoin constitutes “capital” under Regulation 10(1)(c) of the Exchange Control Regulations, 1961.

Issue 2: Whether Bitcoin constitutes “money” under the same Regulations.

Issue 3: Whether the forfeiture order issued by the Deputy Governor was procedurally valid and substantively justified.

ARGUMENTS PRESENTED

5.1 Applicant’s Arguments

Mangundhla made three main arguments. First, he argued that Bitcoin is a purely digital, intangible asset that is not issued by any central bank or sovereign authority. Because the Exchange Control Regulations were drafted in 1961 and their legislative predecessors date to 1933, he submitted that the drafters could never have intended to regulate cryptocurrency. Second, he contended that transferring Bitcoin to a wallet on a foreign exchange does not constitute “export” of capital, as the wallet remains accessible from anywhere in the world, including South Africa. Lastly, he argued that even if the Regulations applied, the forfeiture order was procedurally flawed.

5.2 Respondent’s Arguments

In its defence, the SARB urged the Court to adopt a functional interpretation of law rather than a rigid, formalist one. The Bank argued that regardless of how Bitcoin is technically classified, it functions as a store of value and a medium of exchange. On that basis, the Bank submitted that Bitcoin falls squarely within the scope of “capital” as defined in Regulation 10(c) of the Exchange Regulations. The SARB further warned of broader policy consequences. If cryptocurrency were excluded from the Regulations, any person could bypass South Africa’s exchange control system simply by converting rand to Bitcoin and transferring it offshore. This would render the entire regulatory framework meaningless. Finally, the Bank maintained that the forfeiture order was fully consistent with the powers granted under Regulation 22B and that its actions were legally sound.

COURT’S REASONING AND ANALYSIS

Wilson J approached the central question: Whether the Exchange Control Regulations apply to cryptocurrency; through three interconnected lines of reasoning.

First, textual interpretation. The Court examined Regulation 10(1)(c), which prohibits the export of “capital” without Treasury permission. The Regulations do not provide an exhaustive definition of “capital.” Wilson J observed that in context, capital refers to financial assets that hold value and can function as a medium of exchange. Bitcoin, the Court found, satisfies this description. It can be purchased with rand, held as an investment, sold for profit, and used to acquire goods and services. The fact that it is not physical currency did not remove it from the ordinary meaning of capital.

Second, purposive interpretation. The Court traced the purposes of the Exchange Control Regulations as established in prior Supreme Court of Appeal case law: preventing the loss of foreign currency resources, controlling the movement of financial assets into and out of South Africa, and avoiding interference with the financial system. Wilson J held that if cryptocurrency were excluded from the Regulations, all three purposes would be substantially defeated. The entire exchange control system could be circumvented by converting rand to Bitcoin and transferring it offshore. A purposive reading therefore compelled the conclusion that the Regulations applied.

Third, rejecting the “magical thinking” argument. The applicant had contended that cryptocurrency was fundamentally different from traditional forms of capital because it is intangible, technological, and unregulated. Wilson J rejected this as irrelevant. He noted that money and capital have always taken different forms throughout history. The drafters of the 1933 legislation and the 1961 Regulations understood that financial assets are fungible and that new forms would emerge. The fact that they could not have specifically anticipated Bitcoin did not mean the law could not apply to it.

Significantly, Wilson J directly addressed the conflicting 2025 High Court judgment in Standard Bank of South Africa v South African Reserve Bank. He held that the Standard Bank decision was “clearly wrong” because it had focused too narrowly on cryptocurrency’s technical features rather than its functional characteristics. That judgment, Wilson J stated, was not binding on him, and he declined to follow it. Having concluded that Bitcoin constituted capital, the Court found that Mangundhla had indeed exported capital without permission. The forfeiture order was confirmed.

JUDGMENT & RATIO DECIDENDI

The decision: The application was dismissed in its entirety. The forfeiture order issued by the Deputy Governor was confirmed. Costs were awarded against the applicants, including the costs of two counsel where employed.

Ratio decidendi: Cryptocurrency that functions as a financial asset capable of holding value and being used as a medium of exchange constitutes “capital” under Regulation 10(1)(c) of the Exchange Control Regulations, 1961. The transfer of such cryptocurrency to a wallet on a foreign exchange without Treasury permission amounts to the unlawful export of capital.

CRITICAL ANALYSIS

Significance of the decision. This judgment fills a significant gap in South African exchange control jurisprudence. For several years, legal uncertainty surrounded the question of whether cryptocurrency transactions could trigger exchange control violations. Mangundhla provides a clear answer: they can. However, the judgment also creates a direct conflict with Standard Bank v SARB (2025), in which a different High Court division held that cryptocurrency was neither money nor capital under the same Regulations. Neither judgment is binding on the other, leaving market participants in a genuinely uncertain position until the Supreme Court of Appeal or Constitutional Court resolves the conflict.

Strengths of the reasoning. Wilson J’s functional approach is the correct method for applying old statutes to new technologies. Rather than asking whether the 1961 drafters “intended” to regulate something they could not have imagined, the Court asked whether cryptocurrency falls within the ordinary meaning of “capital” when understood in light of the statute’s purposes. This approach respects legislative supremacy while giving the law sensible application to unforeseen circumstances. The Court’s refusal to treat cryptocurrency as legally exceptional; as somehow immune from regulation simply because it is digital; is also sound. If every new financial technology required fresh legislation before it could be regulated, regulatory systems would perpetually lag behind market developments.

Weaknesses and unanswered questions. Despite its strengths, the judgment leaves several questions unresolved. First, the Court’s conclusion that Bitcoin is also “money” is more contestable. “Money” in exchange control law has traditionally meant legal tender issued by a sovereign authority. Bitcoin is neither. The Court could have rested its decision entirely on the finding that Bitcoin is capital, without venturing into the more dubious claim that it is money. Second, the question of when a cryptocurrency transfer constitutes “export” remains underexplored. If both the sender and the recipient are in South Africa, but an intermediary wallet is located on a foreign exchange, has an export occurred? The judgment does not provide clear guidance on this factual variation. Third, the Court’s dismissal of the Standard Bank judgment as “clearly wrong” may be too swift. That judgment, while perhaps incorrect, raised legitimate concerns about applying Depression-era legislation to block chain technology without clearer legislative direction.

Implications and impact. For cryptocurrency traders and exchanges, Mangundhla signals that the Reserve Bank has both the authority and the willingness to pursue exchange control violations involving digital assets. The draft Capital Flow Management Regulations, 2026, which explicitly include cryptocurrency as capital, suggest that legislative confirmation of this approach is forthcoming. Until the conflict with Standard Bank is resolved, however, prudent market participants may seek legal advice before moving significant cryptocurrency value offshore.

CONCLUSION

In Mangundhla v South African Reserve Bank, the Gauteng High Court held that cryptocurrency constitutes “capital” under the Exchange Control Regulations, 1961, and that transferring Bitcoin to foreign exchange wallets without Treasury permission amounts to the unlawful export of capital. The Court’s functional approach; asking what cryptocurrency does rather than what it is technically classified as; provides a defensible method for applying old statutes to new technologies. However, the judgment creates a direct conflict with a 2025 High Court decision, leaving South African exchange control law in an unsettled state. Until the Supreme Court of Appeal or Constitutional Court resolves this conflict, the legal status of cryptocurrency under exchange control law will remain genuinely uncertain. What is clear is that South African courts will not treat cryptocurrency as legally exceptional simply because it is digital. The functional approach adopted in Mangundhla is likely to guide future judgments, whether or not the specific conclusion on “money” survives appellate review.

REFERENCE(S):

• Mangundhla v South African Reserve Bank [2026] ZAGPJHC 579
• Standard Bank of South Africa v South African Reserve Bank [2025] ZAGPJHC (unreported, cited in Mangundhla)
• Exchange Control Regulations, 1961, GN R1111 in GG 274, 1 December 1961