The recent Gauteng High Court judgment in Mangundhla and Another v SA Reserve Bank and Others is contradictory to a previous decision in Standard Bank v SARB, creating conflicting High Court authorities on whether exchange controls apply to crypto assets.

The situation, says Alude Xuba, founder and managing attorney of an IP law firm, calls for appellate resolution.

In a Daily Maverick analysis of the judgment, Xuba says the current reasoning is unlikely to survive intact, suggesting that the SCA may well uphold the outcome on narrower grounds.

'Pending appellate clarity, practitioners should advise that any transfer of cryptocurrency by a SA resident to a foreign-registered exchange without SARB approval carries a meaningful risk of being treated as an unlawful capital export. The deeper question this case poses, whether courts or Parliament should adapt a 20th-century regulatory framework to 21st-century digital assets, remains open,' Xuba writes.

He says while the judgment’s policy orientation is defensible, its doctrinal foundations are not.

'A court may properly interpret ambiguous text in light of legislative purpose. What it may not do is supply coverage where none exists, rewrite statutory definitions, or ignore the legislature’s deliberate silence. Mangundhla does all three.'

The judgment on 1 June held that Bitcoin 'constitutes both money and capital' under the 'Exchange Control Regulations of 1961, (regulations)' and that transferring crypto assets to foreign exchange wallets amounts to the unlawful export of capital, notes Xuba.

'The court dismissed the review application against forfeiture orders totalling about R6m, with costs on scale C. The contrary decision in Standard Bank v SARB 2025 (5) SA 289 (GP) was dismissed as “clearly wrong”.'

The court defined 'capital' as any financial asset capable of holding value or serving as a medium of exchange (para. 13), explains Xuba.

'Applying this test, Bitcoin qualified because it can be exchanged for fiat currency, used directly to purchase goods and services and serves as both a medium of exchange and a store of value. The court held that export occurs when the thing exported leaves the country and that crediting Bitcoin to wallets on foreign exchanges suffices (para 26). Regarding forfeiture, the court held that Bitcoin is money because the regulations defined “money” to include any bill of exchange or other negotiable instruments, and Bitcoin exhibits qualities sufficient to bring it within this definition.'

However, says Xuba in the DM analysis, the court’s definition of 'capital' finds no support in the regulations, the Currency and Exchanges Act 9 of 1933, or any binding authority.

'It offers no limiting principle: on this formulation, any asset holding value and exchangeable, including art, vehicles, or any tradable commodity, would constitute capital. The court does not explain why Oilwell (Pty) Ltd v Protec International Ltd 2011 (4) SA 394 (SCA) (at paras 9-11) excluded tangible property if the test is merely the capacity to hold value and serve as a medium of exchange. The distinction between financial and tangible assets collapses entirely ….'

In contrast, Motha J in Standard Bank held that cryptocurrency is neither money nor capital, emphasising it is not legal tender, is nothing more than codes on a digital ledger, exists globally and that restrictive interpretation applies to punitive forfeiture powers, notes Xuba in the DM.

'Wilson J (in Mangundhla) dismissed this as “clearly wrong” (para 22) without a sustained engagement with Motha J’s reasoning.' Xuba says a conflicting High Court judgment on identical legal questions merits careful distinction or reasoned explanation of error.

'The conclusory dismissal is insufficient.'

Additionally, Xuba says Bitcoin has no physical existence; it exists as entries on a distributed ledger replicated globally.

'... The location of a cryptocurrency wallet is indeterminate, where an exchange may be registered in a particular jurisdiction, the blockchain itself is decentralised. The court’s assertion that the starting point is the location of the account, not the account holder (para 28) assumes a crypto account has a location, which does not hold for self-custodied wallets or decentralised exchanges. ... The approach creates absurd results: if transferring to a foreign-registered exchange is export, then any use of a foreign exchange from a SA computer constitutes export. The court provides no guidance regarding exchanges with dual registration or decentralised exchanges.'

Full Daily Maverick analysis

Wilson judgment

Mothwa judgment