A report released on May 21 by the Free Market Foundation criticized the draft’s provisions on private property and privacy. On April 17, South Africa’s National Treasury published a draft Capital Flow Management (CFM) regulations aimed at replacing the foreign exchange control regulations introduced in 1961. The draft includes provisions such as mandatory reporting of crypto holdings, mandatory surrender of crypto keys, and the ability to search, seize, and copy data without a search warrant.
Key provisions of the CFM draft targeting cryptocurrencies
Based on the text of the draft, the following are seven main provisions targeting crypto assets:
Mandatory reporting: South African citizens must report to the government all cryptocurrencies they hold
Transaction restrictions: Crypto-asset transactions above a threshold must be carried out through, or licensed by, an authorized crypto-asset service provider (CASP)
Use restrictions: When purchasing cryptocurrencies through an authorized CASP, the purpose must be declared and may not be used for other purposes
Mandatory sale: The Treasury may compel holders to transfer crypto assets to the state at the rand exchange rate determined by the government
Mandatory key surrender: Officials may compel anyone to hand over passwords, crypto keys, and decryption keys; refusal to surrender constitutes a criminal offense
Search without a warrant: Government officials may enter a residence or workplace without a search warrant, search, and seize equipment, and copy data
Punitive sanctions: Noncompliance may result in a fine of at least 1 million rand or an amount equal to the noncompliance (whichever is higher), or 5 years’ imprisonment, or both
Current use of cryptocurrencies in South Africa
South Africa has already developed real-world commercial use of cryptocurrencies. Customers at Pick n Pay supermarkets can use bitcoin to shop, and circular local bitcoin economies have appeared in informal residential areas in Witsand, Plettenberg Bay, and Mossel Bay. South Africa also has an active fintech startup and bitcoin retail application ecosystem. The Free Market Foundation says that the draft’s transaction-licensing requirements will increase compliance burdens for small businesses and individuals, while large CASPs will be relatively easier to adapt to the new requirements.
Procedural backdrop: regulatory measures can bypass the legislative process
The CFM draft is issued in the form of a ministerial order. Unlike formal legislation that requires approval by Parliament, it can take effect overnight. The public consultation period is only 22 days (April 17 to May 18). As of the time of this report, South Africa’s National Treasury and the South African Reserve Bank (SARB) have not issued an official response to external criticism of the draft.
FAQ
Has the public consultation period for South Africa’s CFM draft ended—what happens next?
The deadline for public submissions is May 18, 2026. After the draft, the subsequent process will be reviewed and amended by South Africa’s National Treasury based on the received comments, and then can be brought into effect by the minister through an order, without requiring approval from Parliament. South Africa’s National Treasury has not yet published a timeline for the final amendments to the draft.
What legal consequences do the provisions on mandatory surrender of crypto keys have?
Under the draft’s terms, government officials may compel anyone to hand over passwords, crypto keys, and decryption keys; refusal to surrender constitutes a criminal offense. The overall penalties for violations are at least 1 million rand in fines or an amount equal to the violation (whichever is higher), or 5 years’ imprisonment, or both.
Why does the CFM draft adopt a regulatory instrument form rather than legislation?
The CFM draft is issued in the form of regulations under South Africa’s 1933 Currency and Foreign Exchange Act, allowing the minister to make it effective through a single order without Parliamentary debate or approval. The Free Market Foundation says that this procedural form weakens accountability mechanisms between the public and elected representatives.
