CASE STUDY | How These 2 Legal Developments Provide Clarity on the Treatment of Crypto Assets in South Africa

Two recent developments have provided greater clarity on the treatment of crypto assets in South Africa even as questions remain about their legal status across different regulatory frameworks.

On May 28 2026, the South African Reserve Bank (SARB), the Financial Sector Conduct Authority (FSCA), the Prudential Authority and the Financial Intelligence Centre issued Joint Communication 1 of 2026 on crypto assets used for domestic payment purposes. The communication clarified that crypto assets are not regarded as payment instruments, money, or legal tender under South Africa’s National Payment System Act (NPS Act).

Days later, on June 1 2026, the Gauteng High Court delivered judgment in Mangundhla and Another v South African Reserve Bank and Others, holding that Bitcoin constitutes both “money” and “capital” for purposes of South Africa’s exchange control framework.

At first glance, these positions appear contradictory.

However, when viewed in their proper legal context, they reflect a growing recognition that the classification of crypto assets depends on the legislative framework and policy objective under consideration.

Financial Products Are Not Necessarily Payment Instruments

A key theme emerging from the Joint Communication is the distinction between the regulation of crypto assets as financial products and their treatment within the national payments system.

In 2022, the FSCA declared crypto assets to be financial products under the Financial Advisory and Intermediary Services Act (FAIS Act), bringing crypto asset service providers within the financial regulatory perimeter. The purpose of that declaration was to strengthen consumer protection and regulate crypto-related financial services. It was not intended to confer legal tender status on crypto assets or integrate them into South Africa’s payment infrastructure.

The Joint Communication therefore emphasises that authorisation under the FAIS Act does not amount to authorisation to provide payment services under the NPS Act. Crypto assets remain outside South Africa’s regulated payment system despite being regulated as financial products.

Crypto Assets and the National Payment System

The communication confirms that

• crypto assets currently fall outside the scope of the NPS Act,
• are not recognised as money or funds for purposes of that legislation, and
• do not constitute legal tender in South Africa.

This does not mean crypto transactions are prohibited. Businesses and individuals may still agree to settle obligations using crypto assets. However, such arrangements remain private contractual transactions rather than transactions conducted within South Africa’s regulated payment infrastructure.

The distinction is significant because the NPS Act governs the clearing, settlement and processing of payments within the formal financial system. By excluding crypto assets from that framework, regulators have clarified that crypto-based transactions do not currently enjoy the legal status of recognised payment instruments.

The Mangundhla Judgment

The High Court’s decision in Mangundhla addressed a different question entirely: whether Bitcoin constitutes money or capital for purposes of South Africa’s exchange control laws.

The case involved approximately 1,680 Bitcoin transferred to wallets accessible through offshore cryptocurrency exchanges. The court concluded that Bitcoin is both money and capital within the meaning of the Exchange Control Regulations and the Currency and Exchanges Act.

The court found that Bitcoin can be purchased, held as an investment, exchanged for fiat currency and used as a medium of exchange. On that basis, it falls within the concept of capital for exchange control purposes. The judgment further held that transferring Bitcoin to offshore exchange wallets amounts to the export of capital and may therefore require exchange control approval.

In reaching this conclusion, the court departed from an earlier ruling in the Standard Bank case where another judge held that cryptocurrency did not constitute money or capital under the existing exchange control framework. The Standard Bank decision remains subject to appeal, meaning the Supreme Court of Appeal may ultimately provide a definitive interpretation of the law.

Is There Really a Contradiction?

Although the Joint Communication and Mangundhla appear to reach different conclusions, they address different legislative regimes and regulatory objectives.

The Joint Communication concerns payment system regulation and whether crypto assets should be recognised as payment instruments within South Africa’s formal financial infrastructure. The Mangundhla judgment focuses on exchange controls and the movement of value across South Africa’s borders.

Viewed through that lens, the two positions are not necessarily inconsistent. A crypto asset may be characterised differently depending on the purpose of the legislation being applied. The emerging trend suggests that regulators and courts are increasingly adopting a functional approach, assessing crypto assets according to the role they perform within a particular statutory framework.

Stablecoins and Future Reform

One of the most significant aspects of the Joint Communication relates to stablecoins.

Regulators indicated that future amendments to the NPS Act could allow the SARB to designate and regulate payment instruments beyond traditional forms of money.

While the SARB appears reluctant to recognise unbacked crypto assets such as Bitcoin as payment instruments because of volatility concerns, the communication signals a more open approach toward stablecoins.

The Intergovernmental Fintech Working Group is currently examining use cases for rand-backed stablecoins, while the SARB has expressed interest in exploring stablecoin payment arrangements through its regulatory sandbox initiatives.

These developments come against the backdrop of broader reforms that are expected to bring crypto assets formally within South Africa’s capital flow and exchange control framework. Proposed regulations would subject cross-border crypto transactions to greater oversight and reporting requirements.

Practical Implications

For crypto asset service providers, the Joint Communication confirms that compliance with the FAIS framework remains essential, but does not create authority to offer regulated payment services. For fintechs and payment providers, the communication provides greater certainty regarding the boundaries of the current regulatory framework.

At the same time, the Mangundhla judgment demonstrates that crypto assets are unlikely to fall outside regulatory oversight simply because they rely on new technology. Businesses facilitating cross-border crypto transactions should carefully assess potential exchange control implications.

Taken together, the Joint Communication and the Mangundhla judgment highlight the increasingly nuanced approach being adopted by South African regulators and courts.

As the country’s digital asset framework continues to evolve, the legal treatment of crypto assets is likely to depend less on what they are in abstract terms and more on the function they perform within a specific regulatory context. Future developments, particularly the pending appeal in the Standard Bank matter and ongoing exchange control reforms, will play an important role in shaping the next phase of South Africa’s crypto regulatory landscape.

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