South Africa’s cryptocurrency landscape is at the center of a heated legal dispute involving the South African Reserve Bank (SARB), major financial institutions, and the courts. At stake is the future of crypto regulation in the country, following a controversial transfer of 4,400 Bitcoins—worth approximately $566 million—from a local company to an overseas exchange. This high-profile case has exposed cracks in South Africa’s regulatory framework, igniting debates over whether outdated laws are fit for modern digital assets.

SARB Appeals Pretoria High Court Ruling on Crypto

On June 2, SARB announced it would appeal a Pretoria High Court decision that questioned the application of apartheid-era exchange control laws to cryptocurrencies. The court had ruled that Regulation 22C, a law enacted during apartheid to control foreign currency flows, does not apply to cryptocurrencies in 2025. Judge Mandlenkosi Motha, who presided over the case, criticized using archaic legislation to regulate the rapidly evolving crypto space.

SARB, however, strongly disagrees with this interpretation. The central bank insists Regulation 22C remains a powerful tool to monitor and restrict suspicious crypto transactions, especially those that may circumvent South Africa’s exchange control framework designed to safeguard the country’s financial system.

The $566 Million Bitcoin Transfer That Triggered the Dispute

This legal showdown originated from the case of Leo Cash and Carry (LCC), a South African company that came under scrutiny after transferring 4,400 BTC to Huobi Global, a Seychelles-based cryptocurrency exchange. The transaction, worth about R566 million ($30 million+), raised alarms with SARB’s Financial Surveillance Department (FinSurv), which deemed it a violation of the country’s foreign exchange control laws.

Standard Bank, acting on behalf of creditors and liquidators of LCC, filed a suit against SARB, the Minister of Finance, and other parties to recover funds lent to the company before its liquidation. The bank argued that SARB’s restrictive stance on cryptocurrency transfers hindered financial operations and investor interests.

Controversy Over Regulation 22C’s Role in Crypto Oversight

The core issue revolves around whether Regulation 22C—originally created to prevent capital flight during apartheid—can be legitimately extended to cryptocurrencies today. SARB believes it should, citing the law’s broad mandate to protect South Africa’s financial security from illicit or large outbound transfers.

Critics argue that the law is outdated and ill-suited to govern decentralized digital assets. They point out that cryptocurrencies operate outside traditional banking systems, making it difficult to enforce exchange controls meant for fiat currencies.

Expert Opinions Highlight Risks and Regulatory Challenges

Industry experts have weighed in on the controversy. Harry Scherzer, a well-known voice in South Africa’s crypto scene, suggests that SARB’s strict enforcement could backfire. According to Scherzer, the current approach risks making exchange control laws ineffective because it allows individuals to circumvent limits by moving funds via crypto channels.

“This essentially undermines the entire exchange control system, enabling people to transfer unlimited funds abroad as cryptocurrency,” he said. “It’s likely some have already taken advantage of this loophole.”

Implications for South Africa’s Crypto Future

This dispute highlights the growing tension between traditional regulatory frameworks and the emerging world of digital assets. South Africa is not alone; countries worldwide are grappling with how to integrate cryptocurrencies into existing financial laws without stifling innovation or compromising security.

For SARB, the challenge is to balance investor protection and financial stability while adapting to a fast-changing crypto market. The appeal decision, expected in the coming months, could set a significant precedent for how cryptocurrencies are regulated in South Africa going forward.

What This Means for Investors

Investors and crypto users in South Africa are watching closely. A ruling favoring SARB could mean tighter controls and restrictions on moving crypto funds abroad. Conversely, a decision rejecting Regulation 22C’s application might open the door for freer crypto flows but also increase risks related to capital flight and regulatory gaps.

Either way, the case underscores the urgent need for updated, clear, and tailored crypto regulations that reflect modern financial realities without undermining national interests.