South Africa's cryptocurrency regulatory framework is entering a new phase, with recent court rulings and proposed rules giving authorities greater powers to scrutinise crypto transactions — particularly those involving the movement of capital offshore.

Court Upholds SARB Blocking Order Against Kastelo

The latest development came on July 28, 2026, when the Gauteng Division of the High Court in Johannesburg dismissed an application by fintech company Kastelo to overturn a South African Reserve Bank (SARB) blocking order on its bank account — an enforcement mechanism that prevents the account holder from using the affected funds. The full judgment (PDF) sets out the court's reasoning.

The court found that SARB had reasonable grounds to suspect that Kastelo's business model contravened South Africa's exchange-control regulations, and held that the central bank was not required to prove an actual contravention before issuing a blocking order.

The case centred on Kastelo's algorithmic crypto-trading model, under which clients used their foreign-exchange allowances to facilitate transactions involving foreign currency and crypto assets. Those allowances are a core feature of South Africa's exchange-control regime, which has restricted cross-border capital movements since 1961 under the Currency and Exchanges Act of 1933 and the regulations issued under it: individual residents may transfer up to R1 million a year abroad under the single discretionary allowance, and up to R10 million under the foreign investment allowance subject to tax clearance. SARB alleged that the structure circumvented exchange-control restrictions and that approximately R4 billion (~$250 million) had been transferred offshore during 2025. The court accepted SARB's evidence that there were reasonable grounds for suspicion and upheld the blocking order.

Why the Judgment Matters

For crypto businesses, the judgment is significant because it confirms that existing exchange-control enforcement powers can be applied to crypto-related business models where authorities believe there is a risk of regulatory circumvention. In practical terms, the court held that a blocking order may rest on reasonable suspicion alone, without the central bank first proving an actual breach.

At the same time, the ruling does not establish that crypto transactions are inherently unlawful, or that every offshore crypto transfer constitutes an exchange-control violation. As a High Court decision, it does not finally resolve the broader legal question of how crypto assets should be classified under South Africa's exchange-control regime — a question that has already produced conflicting judgments.

In June 2026, the Johannesburg High Court ruled in Mangundhla & Another v South African Reserve Bank that Bitcoin is both "money" and "capital" for purposes of the Exchange Control Regulations (REGULATION | South African High Court Says Bitcoin Should be Treated as Capital Under the Capital Control Regime). The court expressly rejected the approach taken in the 2025 Standard Bank v SARB case, in which another Gauteng High Court had concluded that cryptocurrency was neither money nor capital for exchange-control purposes.

The result is a significant shift — but not yet a final judicial settlement.

From Licensing to Capital-Flow Rules

The broader regulatory direction is nevertheless becoming clearer. South Africa began developing a formal crypto framework through the Intergovernmental Fintech Working Group (IFWG) after years of treating digital assets primarily as an emerging financial risk. In October 2022, the Financial Sector Conduct Authority (FSCA) declared crypto assets financial products under the FAIS Act — the Financial Advisory and Intermediary Services Act — bringing crypto-related financial services into the licensing regime (South Africa's Financial Regulator, FSCA, Declares Crypto Assets as a Financial Product).

The licensing framework for crypto-asset service providers (CASPs) took effect in June 2023. By March 2026, the FSCA had received 533 applications, approved 310 and declined 17, with additional applications withdrawn or still under consideration (2025 RECAP | South Africa Had Approved 300 Crypto Firms Out of 512 Applications as of December 2025).

Regulation has since expanded beyond licensing. In March 2026, South Africa implemented the OECD's Crypto-Asset Reporting Framework, a cross-border transparency standard modelled on the Common Reporting Standard, aligning crypto-asset reporting with international standards and requiring qualifying crypto-asset service providers to report transaction information to the South African Revenue Service (SARS) (TAXATION | The South African Revenue Service Publishes New Crypto Reporting Rules).

In parallel, the National Treasury and SARB have been working to bring crypto assets explicitly into the country's capital-flow framework. Draft Capital Flow Management Regulations, 2026, published in April 2026, propose replacing the existing Exchange Control Regulations outright and expressly incorporating crypto assets (REGULATION | South Africa's Draft Capital Flow Management Regulations, 2026, to Demand Limited Crypto Holdings, Mandatory Resales).

In August 2026, Treasury and SARB released a draft Crypto Assets Manual dealing specifically with cross-border crypto transactions, including permissions, reporting, and the role of authorised crypto-asset service providers; the draft has been opened for public comment (PRESS RELEASE | National Treasury, South African Reserve Bank Invite Comments on the Crypto Assets Manual for Cross-Border Activities Draft).

Substance Over Form

Taken together, this places the Kastelo and Mangundhla judgments into a broader context: South Africa is no longer simply asking whether crypto should be regulated; it is increasingly deciding how crypto should fit into existing financial, tax, AML and exchange-control systems (CASE STUDY | How These 2 Legal Developments Provide Clarity on the Treatment of Crypto Assets in South Africa). That trajectory has unfolded alongside heightened international scrutiny of the country's financial-controls regime, including South Africa's placement on the Financial Action Task Force's "grey list" of jurisdictions under increased monitoring in February 2023.

For the industry, the emerging principle is important: regulators and courts are increasingly looking at what crypto assets do economically — transferring value, holding capital, and moving funds across borders — rather than relying solely on whether they resemble traditional currency or financial instruments.

The immediate consequence is greater regulatory risk for businesses whose crypto models involve offshore flows, foreign-exchange allowances, or structures that could be viewed as circumventing capital controls. The longer-term question will be whether the Supreme Court of Appeal ultimately resolves the conflicting High Court interpretations over whether Bitcoin constitutes capital under the existing exchange-control regime (REGULATION | South African Reserve Bank Moves Quickly to Block Crypto Loophole, Files Appeal Against High Court Ruling on Exchange Controls).

Until then, Kastelo provides another important signal: crypto may be digital and decentralised, but South African regulators increasingly intend to treat the economic activity around it as subject to the country's financial-control architecture (EXPERT OPINION | Why South Africa Still Has Exchange Controls in 2026 and How Crypto is Getting Pulled Into It).

Source: BitcoinKE