South Africa Plans Revised Capital Rules Covering Crypto After Public Comments

South Africa plans consultations on capital-flow regulations covering crypto assets after thousands of comments on the broader rules, with a revised draft expected but no timetable.

Finance Minister Enoch Godongwana told Parliament Wednesday, Oct. 21, that consultations would begin and the government aimed to publish a revised second draft. He called for moving away from advance approvals toward reviews of transactions for legitimacy and tax compliance. “We must aim to shift away from pre-approvals. Instead, we must assess transactions for legitimacy and tax compliance,” Godongwana said. He gave no publication date and identified no provisions for revision.

The draft Capital Flow Management Regulations were published for public comment April 17. They would bring crypto assets into an exchange-control framework intended to replace the Exchange Control Regulations of 1961. Existing exchange controls still apply to some crypto-related capital transfers.

A separate draft Crypto Asset Manual, published Aug. 3, proposed annual external-transfer allowances for resident individuals: R2 million under the single discretionary allowance and up to R10 million under the foreign capital allowance. The latter would require tax-compliance verification. The manual covered certain individual transfers from an authorized domestic crypto provider to an offshore provider or non-custodial wallet, classifying them as reportable outward flows.

The manual also treated cross-border crypto transactions by South African entities, and transfers from non-custodial wallets into domestic providers, as impermissible. These proposed manual terms are separate from the revised regulations draft Godongwana discussed.

The regulations include a 30-day deadline to declare crypto assets above a threshold the draft does not specify. A separate clause refers to declarations of foreign assets or crypto assets without stating a threshold. The regulations would also allow an authorized institution to purchase certain declared assets for rand; if a purchase were made, the holder would have to sell those assets.

In May, South Africa’s National Treasury and the South African Reserve Bank (SARB) said the proposals were not intended to criminalize possession. They said disposals would apply only in limited circumstances, such as when an offense had been committed.

Consultations are the next stated step. The government aims to publish the revised second draft, but Godongwana gave no timetable.