Treasury’s new draft crypto regulations: progress or policy overreach?

By now, the panic has well and truly set in across SA’s crypto community. If you have spent any time in local digital asset forums this week, you would be forgiven for thinking the government is preparing to kick down doors and forcibly seize hardware wallets.

While Treasury is certainly overreaching with its newly gazetted Draft Capital Flow Management Regulations 2026, the reality requires a much more sober analysis. To properly evaluate the draft, we have to look past the hysteria and examine what the state is actually trying to achieve – and where it is genuinely crossing the line.

First, let us establish the legal reality. The Draft Capital Flow Management Regulations of 2026 do not alter the foundational Currency and Exchanges Act 9 of 1933 itself.

Rather, they are being introduced under the authority of Section 9(1) of that Act, which empowers the government to make regulations regarding currency, banking or exchanges.

So far, so good

Crucially, these draft regulations will finally replace the woefully outdated Exchange Control Regulations of 1961. This modernisation is something the wider crypto community has been begging for. Treasury’s stated intention is to crack down on financial crimes, specifically aiming at “combating money laundering, terrorist financing and the proliferation of illicit financial flows”.

But… in its current form, the state’s drafting ranges from clumsy to dangerously draconian. The most glaring issue is the gaping hole at the heart of the legislation: the “determined threshold”.

Government is proposing severe restrictions on transactions above a certain value, but leaves that actual value entirely blank in the text, deferring instead to future gazettes.

Both crypto payments enabler MoneyBadger (through a statement) and author James Caw (through a submission seen by Daily Maverick) argue that the public consultation is fundamentally flawed because “the exact monetary thresholds that trigger the regulations are not defined in the draft, making it impossible to assess the real-world impact”.

Unnecessary roughness

MoneyBadger rightly claims that under the draft “two individuals or a shop owner cannot buy, sell, or accept bitcoin directly above a certain value unless the transaction goes through a licensed crypto provider”.

This threatens the growing grassroots adoption of bitcoin for everyday essentials such as food and electricity. Forcing everyday commerce through an unnamed intermediary fundamentally undermines the utility of decentralised money.

Then there’s Regulation 10. MoneyBadger points out that the draft requires all individuals in SA to declare any crypto asset within 30 days, notably with no minimum threshold. Compounding this administrative nightmare is the inclusion of mechanisms that empower the state to force the compulsory liquidation of private foreign and crypto assets.

Under the draft, Treasury would gain compulsory purchase powers over certain declared crypto assets, with payment in rand at market or fair value, rather than a free hand to seize all private wallets.

A swing and a miss

Those are the immediate examples of questionably vague policymaking that warrant intense public pushback. What is far less understandable, however, is the viral, misleading panic regarding Regulation 25(5).

Caw and other commentators are highly critical of the state’s power to demand private keys or seed phrases, framing it as a “casual administrative mechanism” that allows officials to instantly demand control of bearer assets.

But this framing omits vital legal context. The legislation does not allow random or casual demands; it specifically applies only to crypto assets that have already been legally forfeited in terms of this regulation (read: suspected or established contraventions of exchange-control rules).

Similarly, commentary suggesting these powers lead to “arbitrary deprivation” without sufficient oversight ignores the procedural safeguards written into the draft.

However, the draft does not appear to create a free-standing power for officials to demand private keys at random. The Regulation 25 mechanism is tied to crypto assets that have been attached or forfeited under the regulations. That said, the safeguards are largely administrative and review-based, rather than requiring prior court authorisation, which leaves room for legitimate concern in fast-moving digital asset markets.

Small victories

However, Caw does make a highly valid counter-argument here: in the context of volatile digital assets, “post-action judicial review may be too slow to prevent financial harm”. The courts are sluggish, and crypto moves at the speed of light.

The draft regulations represent a monumental shift in SA’s financial landscape. There are deep, complex conversations to be had about custodianship, thresholds and the survival of P2P trading before this becomes law.

But until Treasury provides answers to the difficult questions, the industry needs to focus on rigorous, text-based submissions. Engage the draft for what it says, not the dystopian fiction it has been made out to be. DM