Regulation

Two Courts, a Looming Appeal, and a Deadline: The Fight for Our Freedom and Privacy — and Why It’s Up to Us to Retain It

3 June 2026 10 min read

A Gauteng High Court judge has just ruled that Bitcoin is "capital" and "money" under South Africa's Exchange Control Regulations — rules written in 1961, before the internet existed. It's a landmark judgment, and it cost one trader R6 million. But the bigger story isn't this single ruling. It's that the South African state is pushing on every front to drag crypto under capital controls — through the courts, and through a new set of draft regulations now sitting on the table. The good news? It hasn't happened yet. The most dangerous part of this is still just a draft, still open for public comment, still ours to stop. This is a fight — and it's a fight we can win.

First, understand the shape of it. There are two legal roads, and on their own they lead to the same place. Down one, the Supreme Court of Appeal agrees that the 1961 regulations already cover Bitcoin — and the controls switch on. Down the other, the SCA says the old rules don't stretch that far — and the National Treasury simply rewrites them to include crypto by name. Heads the state wins; tails you lose. The "regulatory gap" that crypto holders have been quietly relying on isn't an escape hatch — it's a to-do item on a bureaucrat's desk.

But the courts and the Treasury are not the end of the story, because neither of them is the final authority here. The public is. The most invasive proposals are still in draft, open for comment until 30 June 2026 — and that is precisely where this gets decided. So before we get to why this matters, hold onto this: nothing here is signed, nothing is inevitable, and the people still have the last word if they choose to use it.

What Happened

Between January 2018 and March 2020, Square Mangundhla used the Luno platform to buy Bitcoin in South Africa and transfer nearly 1,680 BTC — worth around R182 million at the time — to wallets on exchanges registered outside the country. He also used a second Luno account under Fungai Dangaiso's name to get around trading limits. Dangaiso didn't trade crypto herself — her account was just a workaround.

The South African Reserve Bank's Financial Surveillance Department treated this as unlawful capital export and ordered forfeiture of approximately R6 million in assets across their bank and Luno accounts. Mangundhla and Dangaiso went to court to overturn the forfeiture.

They lost.

Key takeaways:

Bitcoin is now legally "capital" and "money" under SA exchange control law — at least according to one court. Justice Stuart Wilson held that Bitcoin qualifies because it can be bought and sold for rands, held as a store of value, and used to purchase goods. Moving it to a foreign exchange without Treasury permission is treated the same as illegally exporting rands.
The "location of the account" determines whether capital was exported — not where the person lives. Once the Bitcoin was credited to wallets on foreign exchanges, it had left the Reserve Bank's jurisdiction. What matters is where the exchange is registered, not where you access it from.
Two High Court divisions now directly contradict each other. In May 2025, Justice Motha in the Standard Bank v SARB case ruled that crypto is neither money nor capital under the Exchange Control Regulations. Justice Wilson's June 2026 ruling calls that decision "clearly wrong." South Africa now has two competing High Court judgments on the same legal question.
The Reserve Bank has already appealed the earlier, crypto-friendly ruling. SARB filed an appeal against Justice Motha's Standard Bank decision just two weeks after it was handed down. A Supreme Court of Appeal hearing is expected later this year. The Mangundhla case may end up there too.
Forfeiture of crypto assets was upheld. The court treated Bitcoin as a "negotiable instrument" — the same category as cheques or bills of exchange — making it subject to seizure for exchange control violations.

The "Magical Thinking" Problem

Justice Wilson used the phrase "magical thinking" to describe the argument that Bitcoin's decentralised, intangible nature places it outside exchange control rules. His reasoning: what matters is the economic function of an asset, not the technology behind it. If something holds value and can be exchanged for rands, it's capital — full stop.

There's an irony worth noting. The Exchange Control Regulations were written in 1961 — designed for a world of physical currency, bank wires, and paper-based capital movements. They assume capital has a clear physical location and moves through identifiable channels. Bitcoin doesn't work that way.

The judge bridged this gap by focusing on exchange-hosted wallets — custodial accounts on platforms like Luno, which have a clear jurisdictional home. That reasoning works for centralised exchanges. But it becomes deeply uncertain for self-custody wallets, DeFi protocols, or peer-to-peer transfers. Where is the "location" of Bitcoin held on a hardware wallet in your pocket?

Push the question further and it falls apart entirely. If someone publishes a private key on social media, where is the location of the Bitcoin that key unlocks? It sits on a public ledger, accessible to anyone on earth who reads the post. Or consider a multi-signature wallet that requires three of four signatures to move funds, where all four key-holders live in different countries — where is that Bitcoin jurisdictionally based?

There is no honest answer, and that's not an accident. Bitcoin was designed to be borderless. It is meant to be globally accessible without a gatekeeper, without oversight, and without permission. The courts will have an extremely hard time proving a domestic location for an asset that, by its very nature, has no home. The judgment doesn't grapple with this — and sooner or later, a court will have to.

Two Courts, Two Answers — and the Appeal That Decides Which Road

The most legally interesting part of this ruling isn't the Bitcoin analysis — it's the open contradiction between two High Court divisions.

In May 2025, the Pretoria High Court (Motha J) ruled in Standard Bank v SARB that cryptocurrency does not fall under the definition of "currency," "money," or "capital" in the Exchange Control Regulations. That case involved a company called Leo Cash and Carry, which allegedly acquired over 4,400 BTC (worth around R556 million) and transferred them to a Seychelles-based exchange. Justice Motha set aside the forfeiture, finding a "regulatory lacuna" — a gap in the law that it's Parliament's job to fill, not the courts'.

Now Justice Wilson in the Gauteng Division has ruled the exact opposite, calling Motha's reasoning "clearly wrong" for over-emphasising crypto's technical features at the expense of its economic function.

Both are High Court decisions. Neither binds the other. The Reserve Bank has appealed the Standard Bank ruling to the Supreme Court of Appeal — and that appeal is now the decider. No hearing date has been set; SCA appeals typically take well over a year from filing to a courtroom, so a hearing in late 2026 or 2027, with judgment to follow, is the realistic timeline. The final word on whether the 1961 regulations already cover Bitcoin is at least a year away, probably more.

Two Roads, One Destination

Here's the part that should give crypto holders pause. The SCA appeal will settle the legal question, but it won't change the direction — because both outcomes lead to the same place.

If the SCA sides with Wilson, crypto is "capital," and exchange controls apply to it straight away. If the SCA sides with Motha and finds the old rules genuinely don't reach Bitcoin, the response is already written into the commentary around the case: the National Treasury and the Reserve Bank's Financial Surveillance Department would simply amend the regulations — adding crypto to the definition of capital by name. Motha himself framed the gap as Parliament's job to fill, not a permanent shelter.

So the "regulatory lacuna" so many people have been quietly counting on isn't a loophole that protects crypto. It's a gap the state has every intention of closing — by judgment if the courts allow it, by amendment if they don't. The decision that crypto belongs under capital controls has, in effect, already been made. The SCA only decides the route, not the destination.

Until then, the conservative position — and the one the Reserve Bank will enforce in the meantime — is to treat any cross-border crypto movement as a potential exchange control violation.

The Fence Shouldn't Exist in the First Place

Step back from the legal detail and a bigger question comes into view: why is South Africa building a taller fence around capital in 2026 at all?

Exchange controls are a relic. They were a wartime invention, designed for a world of fixed currencies and closed borders, and most of the developed world quietly dismantled them decades ago. We've written about this before — both on why every country that dropped exchange controls got richer, and on why South Africa's draft crypto regulations are unconstitutional overreach. The pattern is remarkably consistent: every country that dropped exchange controls got richer. Singapore abolished its controls in 1978 with a GDP per capita of around $500 and is now north of $56,000. The UK scrapped them in 1979 and set off the Big Bang that made London a global financial centre. Australia liberalised in 1983 and went on a near-three-decade run without a recession. Meanwhile, the countries that clung to controls — Argentina, Venezuela, Nigeria, Zimbabwe — got black markets, capital flight, and currency collapse instead.

Here's the part worth sitting with: a country only needs capital controls when capital wants to leave. And capital only wants to leave when the policies, the institutions, and the investment climate give it good reason to. Controls don't fix that — they treat the symptom while ignoring the disease. They're a confession, not a solution: an admission that a country isn't confident enough in its own economy to let money move freely.

The fix is not a bigger fence. The fix is building an economy that investors and capital don't want to flee — one where no fence is needed because nobody is trying to climb it. You attract capital by being trustworthy, predictable, and open. You repel it by treating every cross-border transaction as a suspect to be policed.

And make no mistake about what that policing costs. Blocking and surveilling cross-border flows is extraordinarily invasive — it puts the state in the middle of decisions that belong to individuals over their own property. The anti-money-laundering justification doesn't carry the weight placed on it: the fact that a tiny minority misuse a freedom is not a reason to strip that freedom from everyone. AML is not a blank cheque to surrender financial privacy, the security of private property, and the basic right to spend your own time and money as you see fit. A free society does not make every citizen prove their innocence before moving their own savings.

These are draconian rules. They inhibit growth, they run against international best practice, and they deepen exactly the hostile environment for capital, institutions, and investors that drives money away in the first place — which then gets used to justify even tighter controls. It's a doom loop. Bitcoin didn't create that problem. It just made the exit door impossible to ignore.

What This Means for SA Crypto Holders

If the Wilson ruling becomes the accepted interpretation:

Moving crypto from a SA exchange to any foreign exchange could require Reserve Bank approval — the same approval process required for sending rands abroad through your bank.
The annual discretionary allowances (R1 million single discretionary, R10 million foreign investment) may need to cover crypto transfers, not just fiat — though the regulations don't explicitly say this yet.
Crypto businesses operating cross-border will need to factor exchange control compliance into their operations, adding cost and complexity.
Self-custody in foreign-hosted wallets enters a legal grey area. If the "location of the account" test applies, where does a non-custodial wallet sit?

This is a fundamentally different direction from the rest of the world. The United States passed the Clarity Act, which classifies Bitcoin as a digital commodity and creates clear, permissive rules for cross-border trading. The EU's MiCA framework establishes registration requirements without restricting movement of crypto between jurisdictions. South Africa, meanwhile, is trying to fit a borderless technology into a framework designed when moving capital meant carrying suitcases through customs.

The Supreme Court of Appeal will have the last word on the law. But the political direction — that crypto should be fenced in like any other form of capital — looks like it's already been chosen. The courts are catching up to a decision that was taken elsewhere. For a technology built specifically to be borderless and permissionless, that's the real story: not whether the 1961 rules apply, but a state determined to apply some rule, one way or another.

It's Not Over Yet — the Public Still Decides

Here's the crucial point, though: the worst of this is not yet law. The Treasury's Draft Capital Flow Management Regulations — the rules that would formally extend capital controls to crypto, and in their current form would ban self-custody without a government-approved intermediary, allow warrantless seizure of assets and forced disclosure of encryption keys, and attach criminal penalties of up to five years — are still in draft. They are open for public comment until 30 June 2026. They have not been signed. Nothing about this is inevitable.

This is the part people too often forget: public institutions are meant to listen to the public. The Treasury, the Reserve Bank, Parliament — these are not sovereigns ruling over the people. They are representatives of the people, funded by the people, and answerable to them. A public comment period is not a formality to be ignored; it is the moment the public gets to decide. Regulations that face a wall of reasoned, well-argued objection are far harder to push through than ones met with silence.

There is already an organised effort. A group called the Property Rights Defense is mobilising South Africans to submit public comments before the deadline, arguing the draft regulations violate the constitutional rights to property (Section 25) and privacy (Section 14). Whether or not you agree with every position, the principle is sound: this is exactly how a free society is supposed to push back — openly, lawfully, and loudly, while the window is still open.

So if you care about this — about your right to hold and move your own property without asking permission — don't treat the outcome as settled. Read the draft. Submit a comment. Tell others. The people are not spectators to this decision. They are the ones who get to make it, if they choose to show up.

Cape Crypto (Pty) Ltd is a licensed financial services provider (FSP 53746). This article is for informational purposes only and does not constitute financial advice.

Sources:

Leon Kowalski