South Africa has a genuine opportunity in front of it, and it would be a serious mistake to dismiss that too quickly. On 17 April 2026, National Treasury and the South African Reserve Bank released the Draft Capital Flow Management Regulations, 2026. This is not a minor policy update. It is a structural rewrite of how South Africa defines, tracks and regulates CAPITAL in a modern financial system.

The current Exchange Control framework being replaced dates back to 1961 and was made under the Currency and Exchanges Act of 1933. That older framework was built for a world of paper currency, gold flows, formal banking channels and centralised financial institutions. That world still exists in part, but it is no longer the whole picture. Digital assets, global capital mobility and decentralised financial infrastructure have changed how value moves. Reform is necessary. South Africa cannot build a modern financial system on rules designed for a pre-internet age.

There is also a positive economic case for reform. Reuters reported that the Johannesburg Stock Exchange estimates the proposed reforms could attract up to R10 trillion in investment over time, partly by allowing South Africa to compete more effectively as a regional financial hub and by enabling structures that have historically been forced offshore to operate from South Africa. That is a serious opportunity and it should not be dismissed. But this draft misses it altogether.

The risk is that a legitimate reform becomes a blunt control mechanism. The draft does not only modernise exchange-control language. It brings crypto assets formally into the capital-flow framework, expands the definition of capital and gives the state wide powers over foreign currency, gold, securities, crypto assets and other property. The draft defines “capital” broadly to include anything with monetary value, or anything capable of being converted into money or disposed of for monetary consideration, including crypto assets and intellectual property. That definition may be convenient for enforcement, but it is too wide for a modern capital framework that needs technical precision.

Industry leaders have already raised serious concerns. The scale of submissions being prepared by people across the crypto, legal and financial sectors shows that this is not a narrow crypto debate. It is a question about property rights, privacy, capital formation, lawful self-custody and South Africa’s ability to attract innovation instead of exporting it. If South Africa wants to modernise its financial system and attract foreign capital, it cannot create rules that make lawful ownership uncertain or force digital assets into outdated legal categories.

The first reaction many South Africans have is simple: why not just scrap exchange controls entirely? It is a fair question. The Currency and Exchanges Act was written in 1933 and the regulations being replaced date back to 1961. South Africa has also slowly relaxed exchange controls over time. The financial rand was abolished in 1991 and the system has been adjusted gradually since then. National Treasury has presented this draft as part of that broader move away from a restrictive system toward a more modern capital-flow framework.

Prominent figures, including Nelson Mandela and Tito Mboweni, also supported the eventual phasing out of exchange controls. South Africa operates a floating exchange rate. The rand is not fixed to the US dollar, gold or any other asset. Its price is market-driven. In an ideal world with deep institutions, stable fiscal management, broad productivity growth and a trusted currency, the case for exchange controls weakens considerably.

The honest answer is that capital does not wait for weak institutions to catch up. In a stable, productive and trusted economy, free capital movement is a strength. In an economy with weak growth, a fragile currency, fiscal pressure and heavy dependence on foreign capital, sudden outflows can create real instability. Exchange controls were never only about stopping money from leaving. They were designed to manage vulnerability. The state sees them as a mechanism to reduce capital flight, manage pressure on the currency and preserve some visibility over the movement of value in and out of South Africa.

That does not make every control justified. It does not make the system efficient. It does not make the 2026 draft constitutionally sound. It simply means the real question is not “regulation or no regulation.” The real question is what kind of regulation is appropriate for a modern economy. Good law should be clear. It should be proportionate. It should distinguish between asset types. It should target genuine risks. It should protect lawful ownership. It should not treat self-custody as suspicious by default.

The deeper concern behind the draft is not only capital flight. It is disintermediation. Historically, money moved through banks, authorised dealers, foreign exchange desks and regulated intermediaries. That gave the state obvious chokepoints. If capital moved offshore, it generally touched a bank, a dealer, a broker, a payment provider or a formal financial institution. That made surveillance and control administratively possible.

Bitcoin changes that because a person can hold value directly. A company can secure treasury reserves using private keys. A family can hold long-term savings outside a bank balance. A cross-border payment can move without a correspondent banking chain. That is the breakthrough and it is also what worries governments.

No serious state is going to ignore this. South Africa has a legitimate interest in preventing money laundering, fraud, sanctions evasion, tax evasion and unlawful capital export. Nobody serious is arguing that large capital flows should move through opaque channels with no reporting, no accountability and no oversight. The issue is whether the chosen regulatory tool is appropriate.

Applying a 1961 containment model to decentralised digital property is dangerous. It can easily create rules that are difficult to comply with, difficult to enforce fairly and damaging to people who are simply trying to hold lawful assets securely. The state’s interest in visibility over high-risk flows does not justify treating private keys as if they were banking passwords or treating every self-custody wallet as a potential capital flight mechanism.

To understand why the draft has arrived now, we need to look at the case that exposed the gap in the old exchange-control framework. In the Standard Bank v SARB dispute, the Reserve Bank attempted to use the existing Exchange Control Regulations to forfeit funds linked to offshore crypto asset transfers. The matter involved Leo Cash and Carry and the transfer of 4,405.9783 Bitcoin, reportedly worth roughly R556 million at the time, to a Seychelles-based crypto exchange.

The High Court found that crypto assets did not fall clearly within the definitions of “money” or “capital” under the existing Exchange Control Regulations. That judgment exposed a serious legal gap. National Treasury and SARB were always going to respond. In that narrow sense, reform was inevitable.

No credible jurisdiction wants half a billion rand moving offshore outside its anti-money laundering perimeter. A targeted update to bring large crypto flows into a clear reporting framework would be understandable. The concern is that the draft goes much further than that. Instead of narrowly addressing institutional-scale offshore digital transfers, the draft expands the net across foreign currency, gold, crypto assets, securities, intellectual property and other forms of capital. It risks pulling ordinary lawful ownership and self-custody into a permission-based system designed for an older financial world.

The single most important mechanism in the draft is the “determined threshold.” This threshold acts as the trigger for many of the draft’s obligations. It determines when assets must be declared. It determines when transactions must be routed through authorised channels. It determines when restrictions apply. It determines when forced sale provisions may become relevant.

Yet the draft does not state the threshold. It defines “determined threshold” as a value or amount determined by the Minister of Finance. Regulation 31 then allows the Minister to determine the threshold amount in rand by notice in the Gazette. That is a major problem because the threshold is not a minor implementation detail. It determines the reach of the entire framework.

If the threshold is high, the framework mainly affects institutional flows and large capital movements. If the threshold is low, ordinary South Africans with modest offshore savings, Bitcoin, stablecoins, gold or foreign currency may suddenly face declarations, permissions and potential criminal liability. Public consultation is incomplete if the most important trigger point is missing.

A law should not hide the line that determines whether ordinary citizens are affected. This is also a rule-of-law issue. People must be able to know in advance what conduct is permitted, what conduct is restricted and what level of activity triggers legal consequences. Leaving that to later ministerial notice weakens certainty and gives too much power to administrative discretion.

Foreign currency is the asset class most naturally suited to exchange control. It is centrally issued. It usually moves through banks. It can be bought, sold, declared and reported through known systems. Even here, the draft goes further than simple reporting.

Regulation 8 requires a person in South Africa who has control of, obtains possession of or becomes entitled to sell, procure the sale of or transfer foreign currency or crypto assets above the determined threshold to make a written declaration within 30 days or a longer prescribed period. The draft then allows National Treasury, an authorised dealer or an authorised crypto asset service provider to purchase the foreign currency or crypto assets, with the person required to sell and do everything reasonably necessary to transfer the asset or right. The purchase price must be paid in rand and may not be less than market value or fair value, depending on the asset or right involved.

That sounds fair until you understand the purpose of a hedge. A citizen may hold foreign currency precisely because they do not want all their wealth exposed to rand risk. A business may hold foreign currency for future imports. A family may hold it for education, emigration planning, offshore expenses or diversification. If the state can force that person back into rand without a clear, case-specific public interest test, the market value calculation does not solve the underlying problem.

Gold raises the same issue in physical form. Gold is a bearer asset. It has no issuer. It can be held outside the banking system. It has been used for centuries as a hedge against currency weakness, political instability and financial repression. The draft requires a South African resident who becomes entitled to sell or procure the sale of gold above the determined threshold, excluding gold coins, jewellery or artistic works, to offer that gold for sale to National Treasury or an authorised person within 30 days. The purchase price may not be less than market value on the day of purchase.

Again, market value helps, but it does not answer the deeper constitutional concern. People do not hold gold only because they want exposure to the gold price. They hold it because it is a private hard asset outside the liability structure of a bank. Forcing liquidation removes the very protection the person was seeking.

That brings us to Section 25 of the Constitution, which protects against arbitrary deprivation of property. Property rights are not absolute, but state interference must be rational, proportionate and procedurally fair. A broad compulsory surrender or forced-sale power over lawfully acquired private assets should be drafted narrowly and justified carefully. In its current form, the draft does not yet provide enough comfort. It creates the risk of constitutionally vulnerable state-mandated deprivation.

The most serious technical risk sits in the treatment of crypto assets. The draft groups all crypto assets together. Stablecoins, issuer-backed tokens, exchange balances and Bitcoin are placed inside one broad definition. That is not technically sound.

Stablecoins often have issuers. Some have freezing functions. Some are redeemable through identifiable entities. Exchange balances are also different because the customer may have a claim against a platform rather than direct control over the underlying asset. Bitcoin is different. Bitcoin is a decentralised bearer asset. It has no issuer, no administrator, no company and no helpdesk. Once Bitcoin is held in proper self-custody, there is no intermediary with control over the asset. The owner controls the asset through private keys.

This distinction is vital because in traditional finance, a password gives access to an account held by an institution. The bank controls the ledger. The bank can freeze the account. The bank can reverse certain errors. The bank can reset credentials. In Bitcoin, a private key is not merely an access credential. It is control of the asset itself.

This is where Regulation 25(5) becomes so dangerous. The draft says that a person who was the owner or in control of forfeited crypto assets must, upon written demand, provide full particulars of all passwords, personal identification numbers or codes necessary to enable National Treasury to obtain access to and control over the crypto assets and their disposal. That wording may look ordinary to someone thinking in bank-account terms. In Bitcoin terms, it is extraordinary.

A 12-word or 24-word seed phrase is not a password you can safely disclose and then change later. Once it has been seen, copied, photographed or stored, the wallet should be considered compromised. Anyone with that seed phrase can move the Bitcoin. That is the entire point of bearer ownership.

In my consultations around private-key security, I often share a story I heard from a friend. His friend kept a little black notebook with passwords written in the back cover. When she went to activate a new Mac at the iStore, she left the notebook open on the desk. Whether someone saw the words directly or they were captured by cameras, the result was the same. Her 24-word seed phrase had been exposed. By the time she got home, the Bitcoin had been stolen.

That is not because Bitcoin failed. It is because a bearer asset was exposed. Once private keys are revealed, security drops to zero.

The state can request public wallet addresses. It can request transaction records. It can require regulated intermediaries to report suspicious activity. It can use blockchain analytics. It can seek court orders. It can regulate CASPs. It should not create a casual administrative mechanism that results in citizens surrendering private keys or seed phrases. That is not a request for information. It is a demand for control.

Allowing officials to demand private keys in an enforcement framework is not asking for a bank statement. It is demanding the immediate practical handover of the bearer asset. That is why the draft must be amended with technical precision.

This is not only a South African concern. Self-custody is becoming one of the central global debates in digital asset regulation. In the United States, Mike Selig, Chief Counsel of the CFTC Crypto Task Force, recently stated:

“Self-custody must be protected. The United States was founded on the principle of private property, and the seizure of assets is something we must guard against. At the CFTC, that means protecting Americans’ ability to hold and control their own digital assets.”

South Africa has a different constitutional history and a different legal system, but the principle is directly relevant. Private property is not only the right to see a balance on a platform. It includes the right to hold and control lawful assets. In the digital age, that must include the ability to hold private keys.

This is also a capital formation issue. Serious capital does not move into jurisdictions where property rights are uncertain, custody is misunderstood and lawful ownership can be compromised through vague administrative powers. If South Africa wants to position itself as a regional financial hub, it must give investors confidence that lawful assets can be held securely, transparently and with proper constitutional protection.

This does not mean self-custody is outside the law. It does not mean criminals can hide behind seed phrases. It does not mean cross-border flows should be invisible. It means the law must not confuse custody with criminality. A citizen who holds Bitcoin in self-custody is not automatically suspicious. A company using multisig to secure Bitcoin reserves is not automatically evading the state. A family holding Bitcoin for long-term savings is not automatically exporting capital.

Self-custody must be recognised as a legitimate form of lawful ownership if South Africa wants to attract the next generation of financial infrastructure, investment and talent.

One of the most frustrating parts of the draft is that South Africa has already built a functioning crypto regulatory framework. Crypto assets were declared financial products under the FAIS Act framework in 2022. CASPs have gone through FSCA licensing. In March 2024, Reuters reported that the FSCA had received 355 licence applications and approved 59 at that stage, with hundreds still in process. Since then, the licensed sector has continued to develop under the FSCA and FIC regime.

CASPs are also accountable institutions under the FIC Act and must comply with anti-money laundering rules, suspicious transaction reporting and customer due diligence. Travel Rule compliance is now part of the sector’s regulatory reality. FIC Directive 9 requires CASPs involved in crypto asset transfers to obtain, hold and transmit required originator and beneficiary information securely and immediately when transferring crypto assets.

That is the correct direction of regulation. Regulate conduct. Regulate intermediaries. Require reporting. Monitor suspicious flows. Enforce AML controls. Punish fraud. Build transparent, auditable rails. The draft risks layering a second, permission-based exchange control regime over that structure. That creates duplication, increases uncertainty and risks punishing the very businesses that chose to become licensed.

Carel de Jager, speaking at Adopting Bitcoin Cape Town in January 2026, made the point that since the SARB judgment and the introduction of Travel Rule compliance, demand for Bitcoin and stablecoins for cross-border flows had already dropped by an estimated 95% summed across South African exchanges. If that estimate is directionally correct, it is highly relevant. It suggests that the existing regulatory framework is already changing behaviour and addressing the very risk Treasury says it wants to manage.

The answer should not be to duplicate the system. It should be to refine the system we already have.

The constitutional dimension of this draft cannot be treated as an afterthought. The Constitution does not prevent the state from regulating capital flows. It does not prevent financial surveillance in appropriate cases. It does not prevent anti-money laundering rules. It does not prevent lawful seizure of criminal proceeds. It does require that state power be exercised within limits.

Section 25 protects against arbitrary deprivation of property. The draft creates mechanisms that may force the sale or surrender of lawfully acquired assets, including foreign currency, gold and crypto assets. Compensation at market value reduces the harm, but it does not answer the question of arbitrariness. The proper question is whether the deprivation is rational, proportionate and procedurally fair. If a person lawfully holds Bitcoin, gold or foreign currency as a hedge against currency weakness, the state should not be able to force conversion into rand without a clear, specific and reviewable public interest basis. The current wording creates the risk of constitutionally vulnerable state-mandated deprivation of property.

Section 14 protects privacy. Financial privacy is not absolute. Banks report. Accountable institutions conduct FICA. Suspicious transactions must be reported. SARS and law enforcement have lawful information-gathering powers. Private keys are different. A private key or seed phrase is not simply financial information. It is control of property. Requiring disclosure of private keys may expose a person’s financial history, compromise their wallet and transfer practical control of the asset. That is a much deeper intrusion than ordinary financial reporting. The regulations should explicitly prohibit demands for seed phrases and private keys, except under strict judicial supervision and only where no less intrusive method is available. In almost all cases, public wallet addresses, transaction records and regulated intermediary reporting should be sufficient.

Section 33 gives everyone the right to lawful, reasonable and procedurally fair administrative action. The draft recognises PAJA in places, which is helpful, but the concern remains the width of discretion given to National Treasury and authorised persons. Attachment, blocking and forfeiture powers are severe. They can destroy businesses, freeze capital and compromise bearer assets before a final decision is reached. Administrative review after the fact may not be enough where the harm is immediate or irreversible.

Section 34 protects access to courts. The draft does allow judicial review of attachment, blocking and forfeiture decisions, which is important. The concern is timing. If a bank account is frozen, the affected person may not be able to trade, pay staff or meet obligations while waiting for review. If Bitcoin private keys are disclosed, the asset may be compromised immediately. If gold or foreign currency is forced into rand, the hedge is already gone. With digital bearer assets, the remedy must match the asset. Court oversight should come before irreversible harm, not only after it.

Section 35 protects accused persons, including the right not to be compelled to make a confession or admission that could be used in evidence against them. The application of Section 35 to private-key disclosure will require careful legal analysis. It should not be overstated. However, the concern is real. Where the same person is suspected of a contravention and is compelled to provide information that gives the state control over crypto assets and may also evidence the alleged contravention, the self-incrimination issue must be considered. The draft should be revised with that risk in mind.

While we push back against overbroad regulation, we also need to protect ourselves operationally. The draft shows the direction of travel. South Africa is moving toward a model where crypto asset flows above certain thresholds are expected to move through authorised, reportable and regulated channels.

That does not mean Bitcoin ownership is illegal. It does mean that high-value Bitcoin ownership will increasingly need proper structure, record-keeping, reporting and custody design. This is why SimplB has focused on managed self-custody from the beginning.

SimplB operates within the regulated CASP environment through CAEP Asset Managers. Our managed self-custody model is designed to keep clients inside the recognised regulatory perimeter while preserving the core benefit of Bitcoin ownership. Through a properly structured multisig vault, the client retains real ownership and control. SimplB provides the regulated service layer, transaction support, reporting assistance, operational guidance and estate continuity.

That distinction is important. Exchange custody exposes the client to platform risk. Pure self-custody can expose high-net-worth individuals, companies and trusts to operational, estate and compliance risk. Managed self-custody is the middle path: true Bitcoin ownership, stronger security and a structure that advisers, fiduciaries and regulators can understand. The draft makes this more important, not less.

At the same time, managed self-custody should not be used by the state as an excuse to attack ordinary lawful self-custody. Independent self-custody must still be recognised and protected.

The draft should not be rejected outright. The goal of modernisation is valid, but it needs serious revision. The determined threshold must be published before finalisation because public participation is incomplete if the main trigger point is missing. Bitcoin must be distinguished from centrally issued crypto assets, stablecoins and exchange balances because the custody, issuer and control models are different. Private keys and seed phrases must be explicitly protected because the state should be able to request public wallet addresses and transaction records, not private signing credentials.

Forced-sale provisions should be narrowed. Lawfully acquired foreign currency, gold and Bitcoin should not be subject to broad compulsory conversion without a clear and case-specific public interest basis. Attachment and forfeiture powers should require stronger judicial oversight, especially where irreversible harm may occur. The framework should align with the FSCA and FIC regimes rather than duplicate them. It must also make room for compliant self-custody and managed self-custody models. These are not loopholes. They are safer architecture.

This is not merely a crypto regulation issue. It is a structural rewrite of how South Africa regulates capital in a digital, global financial system. The reform could be positive. South Africa can modernise its capital-flow framework, attract investment and create a clearer environment for businesses, asset managers and financial institutions. The R10 trillion opportunity should not be ignored.

A good objective does not rescue bad drafting. If South Africa wants to become a serious regional financial hub, it must protect property rights, respect privacy, define thresholds clearly and regulate digital assets with technical precision.

The deadline for public comment is 18 May 2026. Below is a submission template you can adapt and send to National Treasury.

Stay focused. Stay engaged. And if you want to set up regulatory compliant and secure managed self-custodial bitcoin, book a call at www.simplb.com/meet.

Please also review the below and add your own voice before emailing it to the regulator. The Government Gazette and the Notice from SARB have different email addresses, I recommend using both.

To: [email protected]; [email protected] Date: [Insert Date] Submitted by: [Insert Your Name] ID Number: [Insert ID Number if applicable] Capacity: In my personal capacity as a South African citizen

Subject: Formal Submission on the Draft Capital Flow Management Regulations, 2026

I submit this formal comment in response to the Draft Capital Flow Management Regulations, 2026.

After careful review, I am concerned that the current draft extends beyond AML goals and traditional Exchange Control regulation implementation. It applies legacy exchange control logic to a modern financial environment and creates serious legal, practical and constitutional concerns. Instead of a targeted approach to high-risk cross-border flows, the draft introduces broad measures that may affect ordinary lawful ownership, private wealth preservation and self-custody even inside the borders of South Africa.

In addition the ambiguity introduced throttles foreign confidence and investment into South Africa - a key stated goal of the revision.

I respectfully submit the following objections and requests for revision.

The framework relies heavily on an undefined “determined threshold” to trigger legal obligations, including asset declarations, transaction routing through authorised channels and potential forced sales.

Leaving this central mechanism to be determined later by the Minister of Finance makes genuine public consultation impossible. The public cannot assess whether they will be affected without knowing where this line is drawn.

I request that all monetary thresholds be explicitly quantified within the regulations and subjected to public consultation before finalisation.

The draft groups foreign currency, physical gold, intellectual property, securities and crypto assets under a very broad definition of capital.

These assets have different mechanics and risks. A foreign bank balance, a gold bar, a share certificate, a stablecoin, an exchange balance and Bitcoin should not be regulated as if they are the same thing.

I request that the regulations distinguish clearly between asset classes and apply tailored, proportionate rules to each.

The draft does not properly distinguish between decentralised bearer assets such as Bitcoin and centrally issued or issuer-backed crypto assets.

Bitcoin has no issuer, administrator or company that can reverse transactions or provide access. Regulation that ignores this distinction risks creating rules that are technically impossible to apply or dangerous in practice.

I request that the regulations distinguish between decentralised bearer assets, exchange balances, stablecoins and centrally issued crypto assets.

South Africa already has a functioning crypto regulatory framework. Crypto Asset Service Providers are licensed and supervised, and accountable institutions are subject to anti-money laundering, counter-terrorist financing and reporting obligations under the Financial Intelligence Centre framework, including Travel Rule compliance.

The draft should complement these frameworks rather than duplicate or override them.

I request that National Treasury align the capital-flow rules with existing FSCA and FIC requirements, focusing on regulated intermediaries and high-risk flows rather than criminalising lawful personal ownership and custody.

The draft appears to allow forced sale or compulsory surrender of certain assets, including foreign currency, gold and crypto assets, above the determined threshold.

Compelling citizens to liquidate lawfully acquired private assets, especially assets held as a hedge against currency or financial risk, is a serious interference with property rights.

I request that any forced-sale provisions be removed or narrowed to apply only where a court has found a specific contravention and where the remedy is proportionate.

Draft Regulation 25(5) requires a person whose crypto assets have been forfeited to provide passwords, PINs or codes necessary to allow National Treasury to access and control those crypto assets.

In decentralised systems such as Bitcoin, a private key or 24-word seed phrase is not merely an access credential. It is control of the asset itself. Once disclosed, the asset is compromised.

I request that the regulations explicitly prohibit demands for private keys, seed phrases or signing credentials, except under strict judicial supervision and only where no less intrusive method is available. Enforcement should rely on public wallet addresses, transaction records and regulated intermediary reporting wherever possible.

The draft gives significant administrative powers to attach, block and forfeit money, crypto assets and other property based on reasonable suspicion.

Where property rights are affected, administrative suspicion should not be enough for irreversible deprivation. Citizens must have meaningful access to court oversight before permanent harm occurs.

I request that attachment and forfeiture provisions be amended to require prior judicial authorisation, except in narrowly defined urgent circumstances followed by prompt court review.

A modern capital-flow framework must be clear, technically accurate, proportionate and constitutionally sound.

The public cannot meaningfully comment on a law that leaves key thresholds and implementation details to be determined later.

I respectfully request that National Treasury publish revised draft regulations with quantified thresholds, clearer asset classifications and stronger constitutional safeguards before finalising the framework.

Yours sincerely,

[Insert Your Name]

__________________________

DRAFT ENDS

Thanks for reading and staying engaged!

James Caw

Founder and Bitcoin Strategist | SimplB www.simplb.co.za

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SimplB (Pty) Ltd is a Juristic Representative and James Caw is a supervised Representative of CAEP Asset Managers (Pty) Ltd FSP No: 33933 - an Authorised Financial Services Provider. Nothing in this newsletter should be construed as financial advice. Before taking any action speak to your financial advisor