South Africa's Proposed Crypto Rules Spark Constitutional Concerns

The National Treasury in South Africa has proposed new rules to regulate crypto assets, which critics argue are unconstitutional and draconian. The rules would subject bitcoin and other crypto assets to state controls over their deemed 'importing' or 'exporting', despite having no geographical location in any country.

The Treasury is trying to introduce these controls via two sets of new rules: the Draft Capital Flow Management Regulations of 2026 and a Draft Crypto-Asset Manual for Cross-Border Activities. The Manual fails to explain the legal authority on which it has been drawn up, stating that the National Treasury is responsible for regulating and prohibiting the import and/or export of crypto assets.

However, critics argue that the Treasury and South African Reserve Bank (SARB) do not have the power to make new rules, as this is the province of Parliament under the separation-of-powers doctrine. The Draft Manual also makes absurd assumptions about the location of crypto assets, which are digital assets recorded on distributed ledgers stored on thousands of computers worldwide.

The proposed regulations would allow for draconian penalties, including fines of up to R1 million and/or imprisonment for up to five years, without adequate proof of an 'export' offence. Critics also argue that the rules infringe several guaranteed rights, including the right to privacy in Section 14 of the Constitution.