Government defends rule that could force South Africans to sell their crypto, gold, and forex to the National Treasury

The National Treasury has extended the deadline for public comment on the draft Capital Flow Management Regulations and clarified some of the rules’ more controversial points.

This includes the requirement that South African residents sell their gold, foreign currency, or crypto assets to the National Treasury if they exceed a specific threshold set by the Finance Minister.

According to the Treasury, concerns over this requirement are misplaced, as it would only apply in limited circumstances where an offence has been committed.

The National Treasury published the Draft Capital Flow Management Regulations on 17 April 2026, with the deadline for public comment set for 18 May 2026.

These draft regulations form part of broader efforts to address gaps in South Africa’s current Exchange Control Regulations.

On 15 May 2026, the Treasury announced that it had extended the public comment period to 30 June 2026 following requests for additional time.

In this announcement, the Treasury also sought to clarify some aspects of the draft regulations that drew strong scrutiny when they were first published.

“Media attention and public concerns have already been raised on the draft Regulations,” the Treasury said. 

“Thus far, most of these concerns relate to the treatment, possession and trade of crypto assets, specifically the potential restrictions on cross-border transactions.”

The Treasury sought to clarify two aspects of the draft Regulations: future treatment of crypto assets and undermining private ownership.

On the first matter, the National Treasury explained that the draft Regulations do not intend to criminalise the possession of crypto assets or to apply the Regulations retrospectively.

“A proposed cross-border crypto asset framework, in the form of a draft manual, will soon be released for public comment to complement the draft Regulations,” it said. 

“This draft manual will provide clarity on the proposed activities that would result in a crypto asset transaction being considered as cross-border and the transaction being subject to appropriate capital flow management measures.”

The mandatory sale requirement

The second matter the Treasury sought to clarify relates to sections of the draft Regulations dealing with the mandatory sale of gold, foreign currency, and crypto assets.

Under the proposed regulations, South African residents who obtain possession of, or the right to sell, these assets exceeding a specified threshold must declare and offer to sell them to the National Treasury or an authorised dealer within 30 days.

This “determined threshold” will be set by the Finance Minister, while the amount payable for the assets will be fixed by the Treasury or an authorised person.

Notably, the amount cannot be below the asset’s market value and must be paid out in South African rand.

The mandatory sale requirement also kicks in if someone obtains a credit or balance in a foreign bank account that entitles them to receive payment in foreign currency or crypto assets.

The Treasury explained that concerns over these sections of the draft Regulations are “misplaced”.

“Any requirement to dispose of these assets would arise only under limited circumstances, such as where an offence has been committed,” it said.

The Treasury further pointed out that there have been various exemptions and relaxations of exchange controls over the years.

This, it said, has enabled South Africans to legitimately externalise capital for foreign investment diversification or to hold foreign assets in various forms.

According to the Treasury, the current draft Regulations are intended to strengthen the authorities’ ability to detect, deter, or disrupt illicit financial flows. 

“The proposed framework will complement the regulatory regimes already implemented by the Financial Intelligence Centre and Financial Sector Conduct Authority,” it said.

“The Constitution protects various rights, including property rights, while also recognising that suspected illicit activities warrant the attention of the authorities.”

Werksmans Attorneys director Kyle Fyfe previously said he found the draft Regulations disappointing.

He explained that the nature of the Exchange Control Regulations currently follows a so-called “negative bias approach”.

With this approach, all transactions involving foreign exchange, transactions with non-residents, and exports of capital are prohibited, unless otherwise provided by the National Treasury or the Reserve Bank’s Financial Surveillance Department. 

“Contrary to what National Treasury and the South African Reserve Bank have said, the negative bias approach of the Exchange Control Regulations has been carried across to the draft regulations,” he said.

The final regulations, which must take public comments into account, will still be published, along with the relevant exemptions.

“It is only once these exemptions are published that we will know if the National Treasury and the South African Reserve Bank are serious about modernising the exchange control framework and adopting a positive bias approach to regulating foreign exchange transactions,” Fyfe said. 

“For now, we can only conclude that the current negative bias approach to exchange controls will remain in the new Capital Flow Management Regulations.”