Crypto Assets and Exchange Control: A Critical Analysis of a Defining High Court Judgment
On 1 June 2026, the Gauteng High Court delivered a landmark judgment in the case of Mangundhla and Another v South African Reserve Bank and Others (No. 2022-029979), which has significant implications for the treatment of cryptocurrency under South African law. The judgment held that Bitcoin constitutes both “money” and “capital” within the meaning of South Africa’s Exchange Control Regulations of 1961. This ruling marks a dramatic shift in legal interpretation, effectively subjecting cryptocurrency transactions to exchange control restrictions and treating unauthorized transfers of crypto assets to foreign wallets as unlawful exports of capital. However, this decision conflicts directly with a prior high court ruling in Standard Bank v SARB (2025), creating legal uncertainty that calls for appellate review.
Background and Court Findings
The court’s central finding was that Bitcoin meets the definition of both “money” and “capital” under the Exchange Control Regulations. Justice Wilson reasoned that “capital” should be understood as any financial asset capable of holding value or serving as a medium of exchange. Bitcoin, the court noted, qualifies because it can be exchanged for fiat currency, used to acquire goods and services, and serves as a store of value and a medium of exchange.
On the issue of export, the court took the stance that “export” occurs when the asset leaves the country’s jurisdiction physically or otherwise. In this context, crediting Bitcoin to wallets on foreign exchanges was deemed sufficient to amount to an unlawful capital export, given it moves control outside South African jurisdiction. The judgment upheld forfeiture orders totaling approximately R6 million against the applicants for non-compliance with exchange control laws.
Contrasting Legal Interpretations
This judgment stands in stark opposition to the reasoning in the Standard Bank judgment delivered by Justice Motha, who held that cryptocurrency is neither money nor capital. Motha J emphasized that Bitcoin is not legal tender, exists solely as digital code on a decentralised ledger, and cannot be constrained within jurisdictional borders in the same way traditional currency can. Furthermore, he underscored the need for a restrictive interpretation of forfeiture powers, given their punitive nature.
Wilson J dismissed the Standard Bank decision as “clearly wrong” but without a detailed engagement with the contrasting legal reasoning, leaving the court’s conclusion open to critique. The lack of a thorough comparative analysis or reasoned explanation for rejecting the alternative interpretation limits the persuasive authority of the ruling.
Doctrinal and Practical Concerns
The court’s broad definition of “capital” as any value-holding financial asset is unprecedented and unsupported by the Exchange Control Regulations, the Currency and Exchanges Act of 1933, or binding precedent. This expansive reading risks classifying virtually all assets that can hold or represent value—including art, vehicles, and commodities—as capital, blurring the critical legal distinction between financial and tangible assets.
Moreover, the notion that a Bitcoin transfer to a foreign wallet constitutes an export of capital rests on an uncertain geographic premise. Bitcoin exists as entries on a globally replicated distributed ledger, making the concept of it “leaving” South Africa ambiguous. Unlike physical banknotes, Bitcoin’s decentralised and digital nature challenges the court’s reliance on analogies involving physical movement of currency across borders.
The judgment also equates Bitcoin to negotiable instruments under the Bills of Exchange Act, which requires strict criteria such as written form, an unconditional order or promise to pay a fixed sum, and signatures. Bitcoin fails to meet these statutory requirements, highlighting a fundamental disconnect between the court’s functional test and established legal definitions.
Concerns Over Forfeiture and Procedural Issues
In dismissing the applicants’ administrative review under the Promotion of Administrative Justice Act (PAJA), the court pointed to the ample opportunity the applicants had to engage with the investigation. However, it acknowledged “hesitation” about the potential disproportionality of forfeiture against one applicant but ultimately upheld the forfeiture because proportionality was not formally pleaded as an issue.
This raises concerns about judicial deference in forfeiture cases involving cryptocurrency, particularly given the novel and complex legal theories involved. Courts must carefully balance regulatory enforcement with constitutional protections against disproportionate administrative action.
Implications and Outlook
While the Mangundhla judgment aligns with certain policy goals of regulating cryptocurrency within existing financial frameworks, its legal reasoning raises serious doctrinal issues. The court notably extended or rewrote statutory definitions to encompass crypto assets without clear legislative mandate, despite Parliament’s continuing silence on the matter.
The divergent conclusions reached in the Mangundhla and Standard Bank cases now place South African law in a state of conflict regarding whether exchange control applies to crypto assets. This inconsistency underscores the urgent need for the Supreme Court of Appeal to clarify the legal status of cryptocurrency under exchange control law. It is possible that the SCA might uphold the outcome of Mangundhla on narrower legal grounds while rejecting some of its more sweeping interpretive steps.
Until a definitive appellate ruling, legal practitioners should advise clients that transferring cryptocurrency to foreign exchanges without prior approval from the South African Reserve Bank carries a substantial risk of being treated as unlawful capital export, exposing those involved to regulatory sanctions and forfeiture.
Broader Reflections
This case highlights a fundamental and unresolved tension: whether 20th-century regulatory frameworks, crafted with traditional physical asset classes in mind, can adequately encompass 21st-century digital assets like cryptocurrencies. The courts may be forced to grapple with whether adaptation of existing laws or comprehensive legislative reform is the appropriate path to address the complexities introduced by decentralized, borderless financial technologies.
Author: Alude Xuba, admitted attorney of the High Court of South Africa and founder of a boutique business and intellectual property law firm, brings expertise in corporate law, IP, artificial intelligence, and litigation.
This article presents an opinion and does not necessarily reflect the views of Daily Maverick.
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