$566M Bitcoin Escape? South Africa’s Crypto Laws Just Got Exposed!

The South African Reserve Bank (SARB) has filed an appeal challenging a recent Pretoria High Court ruling, which criticized the use of outdated, apartheid-era legislation to regulate cryptocurrency. The central bank is pushing back against a legal loophole that could potentially allow unlimited funds to exit South Africa via crypto, a move SARB warns could undermine national financial security.

SARB Accuses the High Court of Misjudging Crypto Regulations

In a statement on June 2, the SARB argued that the High Court erred in a prior ruling that allowed Standard Bank to seize Bitcoin holdings belonging to clients. The court, SARB says, failed to recognize cryptocurrencies as either money or foreign currency, a critical omission in interpreting South Africa’s exchange control regulations.

The dispute stems from a case in May, where Standard Bank filed against SARB, the Minister of Finance, Nedbank, and the liquidators of Leo Cash and Carry (LCC). The bank sought to recover funds lent to LCC in 2022 before the company was placed under liquidation.

LCC was later flagged by SARB’s Financial Surveillance Department (FinSurv) after it was revealed the company transferred 4,400 Bitcoins (valued at R566 million) to Seychelles-based Huobi Global exchange. The SARB maintains this action violated South Africa’s foreign exchange control laws.

SARB Defends Use of Regulation 22C

The Pretoria High Court, led by Judge Mandlenkosi Motha, ruled that Regulation 22C — introduced during South Africa’s apartheid era — was not applicable for cryptocurrency regulation in 2025. Motha criticized the use of outdated laws to govern modern financial technology.

However, the SARB strongly disagreed, asserting that Regulation 22C remains valid and empowers the Reserve Bank to block suspicious crypto transactions, especially when potential violations of exchange control laws are involved.

Experts Weigh In: Did SARB Misstep?

Harry Scherzer, a leading industry voice, says the SARB’s stance is flawed. He explained:

“It was relatively clear that the Reserve Bank made an error in the sense that it allows people to evade exchange control, which basically makes the whole of exchange control redundant. You can essentially take out as much money as you want as crypto and send it into dollars abroad, and I’m sure there are some people that did exactly that.”

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