Today, when there is a smartphone in almost every pocket, it is easy to forget how much technology has transformed the world. Most people won’t remember that the first computer, Eniac, completed in 1946, filled an entire room. In the 80 years since then, computing has gone from hulking machines doing basic maths to a device in every pocket capable of doing transactions all over the world in an instant.
Against that pace of change, South Africa is on the verge of rewriting exchange control rules for the digital age — not through an act of parliament but through a ministerial notice issued under a law passed long ago. The National Treasury recently published the draft capital flow management regulations for comment under the Currency & Exchanges Act of 1933. It was followed swiftly by the publication of a South African Reserve Bank manual applying those regulations to crypto assets.
Section 9 of the 1933 act gives the president the power to make and amend regulations governing currency, banks and exchange rates. The Bank then interprets those regulations through its own manuals and circulars. No portfolio committee debates the substance. No public hearings are scheduled. No vote is taken in the National Assembly and no concurrence is sought from the National Council of Provinces. This executive-led process may work when tweaking administrative rules, and in a static environment, but it is the wrong mechanism for reshaping South Africa’s financial policy entirely.
The new draft regulations would restrict businesses from sending crypto and stablecoins across South Africa’s borders, closing off the fastest-growing legitimate use case for digital assets worldwide: instant, low-cost cross-border payment for trade. Globally the value of these transactions reaches into trillions of dollars, as stablecoins have become fully integrated into the world’s financial system.
The accompanying manual goes further, proposing a fine of up to R1m or five years in prison for an individual who declines to hand a customs official the private key to a crypto wallet. It does not require a court order first. These are not technical adjustments to a currency regime. They are new limitations on property, movement and self-incrimination, applied to an asset class that the lawmakers of the 1930s never contemplated.
The Treasury and the Bank will point out that the comment period is open. It closes in less than two months, yet the regulations will bind an industry spanning banks, remittance firms, fintech start-ups and hundreds of thousands of individual crypto holders. They will also shut off local businesses from the benefits of the now globally accepted settlement rails — stablecoins — which settle more value globally than Visa and Mastercard combined. Submissions have already arrived in volume, from large financial institutions to individual asset holders, and it is a fair question whether two departments can absorb thousands of pages of technical comment on a compressed timeline and still produce a regime that survives its first court challenge.
That is the real risk facing South Africa: that exchange control gets modernised through a mechanism built for administrative housekeeping but now applied instead to a body of law affecting constitutional rights.
South Africa operates a legislative process built for exactly this kind of law: public hearings, committee scrutiny, a vote by elected representatives, a testing against the constitution before implementation rather than after. If exchange control needs to be brought into the digital era — and it does — that is the process through which it should be done.
De Wit is country manager for Luno South Africa
