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South African Reserve Bank
 
 
     
 
 

Virtual Currencies / Crypto-currencies 

  • Are there any compliance requirements or exchange controls applicable to crypto assets?

    The South African Reserve Bank (SARB) does not oversee, supervise or regulate crypto assets (CAs) (previously referred to as Virtual Currencies (VCs)) currently, but is continuing its effort to monitor this area as it evolves. SARB’s position on CAs as set out in the ‘Position Paper on Virtual Currencies, 2014’ remains current and relevant. A copy of the position paper is available on the SARB's website, www.resbank.co.za, by following the links: Regulation and Supervision > National Payment System (NPS) > NPS Legislation > Position papers > Position Paper 02 of 2014, Position Paper on Virtual Currencies. 

    To reiterate the SARB’s position, CAs are not recognised as legal tender in the Republic of South Africa (RSA) and any merchant or beneficiary may refuse CAs as a means of payment. CAs are not guaranteed/backed by SARB as it operates independently from the central bank and the users thereof are alerted to the potential risk of fluctuation in its value. There are currently no specific laws or regulations that govern the use of CAs in RSA. It follows, therefore, that currently no compliance requirements exist for local trading of CAs in RSA. However, it should also be noted that no legal protection or recourse is afforded to users, traders or intermediaries of CAs and such activities are performed at the end-users sole and independent risk. Related to CAs are the use of Initial Coin Offerings (ICOs), and similar to CAs, the SARB does not regulate or supervise the usage thereof.
     
    Furthermore, neither the Currency and Exchanges Manual for Authorised Dealers nor the Currency and Exchanges Manual for Authorised Dealers in foreign exchange with limited authority (manuals) allow for cross-border/foreign exchange transfers for the explicit purpose of purchasing CAs. These documents can be obtained from the SARB’s website, www.resbank.co.za, by following the links: Regulation and Supervision > Financial surveillance and exchange controls > Currency and Exchanges documents. 
     
    The Financial Surveillance Department is, from an exchange control point of view, unable to approve any transactions of this nature. 
     
    Currently, the only permissible avenue for purchasing CAs from abroad is through the utilisation of an individual’s single discretionary allowance (R1 million) and/or individual foreign capital allowance (R10 million with a Tax Clearance Certificate), per calendar year, as outlined in the above-mentioned manuals, which a local Authorised Dealer in foreign exchange (local commercial bank) will be able to assist individuals with. 
     
    It should be noted that the purchase of CAs locally and 'transfer' thereof abroad can currently not be accommodated in terms of the single discretionary allowance and/or individual foreign capital allowance. Such a transaction will be in contravention of Exchange Control Regulation 10(1)(c) which states: "No person shall, except with permission granted by the Treasury and in accordance with such conditions as the Treasury may impose - enter into any transactions whereby capital or any right to capital is directly or indirectly exported from the Republic." Although there are no regulations prohibiting residents from trading in CAs in South Africa, should a resident buy CAs locally and use that to externalise 'any right to capital', they will be in contravention of Exchange Control Regulation 10(1)(c).
     
    Furthermore, it should also be pointed out that the repatriation of value through CAs is not acknowledged as a repatriation of an individual’s single discretionary allowance and/or individual foreign capital allowance. Due to the nature of CAs, the repatriation of value into RSA is not a reportable transaction on the FinSurv Reporting system.
     
    Similarly, non-residents who have introduced CAs to RSA for sale locally and who want to transfer the sale proceeds abroad will be unable to do so in terms of exchange control policy due to the fact that there is no proof that foreign currency or Rand from a Non-resident Rand account has been introduced into RSA. The applicable exchange control policy is outlined in section G.(C)(i) and (ii) of the Currency and Exchanges Manual for Authorised Dealers.
 
 
 
     
 
 
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