National Treasury has published the draft Capital Flow Management Regulations for public comment, setting out a proposed framework to replace the Exchange Control Regulations of 1961, issued under the Currency and Exchanges Act.
The draft regulations, released on 17 April, outline how cross-border transactions will be regulated under a revised system.
In the February Budget Review, National Treasury indicated that amendments to the Exchange Control Regulations would be published. These would include the incorporation of crypto assets into the capital flow management framework.
This is intended to complement existing regulation by the Financial Sector Conduct Authority, which in October 2022 declared crypto assets to be financial products under the Financial Advisory and Intermediary Services Act, and the Financial Intelligence Centre, which designated crypto asset service providers as accountable institutions in December 2022.
The definition of a crypto asset in the draft regulations is consistent with that used by the FSCA, which defines it as a digital representation of value that is not issued by a central bank, can be traded, transferred or stored electronically, and uses cryptographic techniques and distributed ledger technology.
According to Notice 7375 in Government Gazette No. 54520, the draft regulations aim to, among other things:
- align the exchange control framework with Organisation for Economic Co-operation and Development and Financial Action Task Force recommendations aimed at combating money laundering, terrorist financing, and the proliferation of illicit financial flows;
- bring crypto assets within the ambit of the exchange control framework, to address risks and ensure the oversight of emerging financial instruments;
- clarify exemptions, permissions, and conditions; and
- impose administrative sanctions where there is non-compliance with the regulations.
These elements reflect the core structure of the existing exchange control system, which is based on permissions, conditions, and the oversight of cross-border transactions.
Areas highlighted by Treasury and the SARB
A joint statement from National Treasury and the South African Reserve Bank said the draft regulations are intended to address gaps in the current regulations, including in relation to cross-border crypto asset transactions.
According to the statement, the draft regulations also provide for:
- new and amended definitions;
- transitional arrangements;
- administrative sanctions on regulated entities;
- increased penalties;
- the removal of any ambiguity regarding the declaration of foreign assets; and
- the removal of restrictions on dealing in securities belonging to non-residents.
“The amendments also address uncertainty regarding local businesses controlled from outside of South Africa,” the statement said.
It added that guidance material, including manuals, will be updated, and exemptions may be granted to support the transition to the new system. Certain measures that are commonly used in other countries could be retained to support the domestic economy.
‘Positive bias’ approach
The draft regulations follow reviews of the exchange control framework conducted by Treasury and the SARB.
“These reviews aimed to refine policies and support South Africa’s growth and global integration, while also acknowledging the economy’s susceptibility to volatile capital flows and exchange rate swings,” the statement said.
“Global integration drives foreign investment growth and technology exchange, while also developing human capital and knowledge and mitigating investment risks through diversification.”
The statement said the amendments signal South Africa’s to adopt a “positive bias” approach to managing cross-border capital flows through:
- fewer transaction pre-approvals,
- a focus on reporting,
- the surveillance of high-impact and high-risk cross-border transactions, and
- the combating of illicit financial flows.
“This shift will align South Africa with international best practice, while also managing various risks using a risk-based approach and existing macroprudential tools,” the statement said.
Continuity and extension
The draft regulations retain key features of the existing exchange control system, including permission-based controls, restrictions on certain cross-border transactions, and the use of authorised dealers to intermediate foreign exchange transactions.
They extend the framework in specific areas, most notably by incorporating crypto assets and providing for a structured system of administrative sanctions.
The deadline to submit comments is the close of business on Wednesday, 10 June 2026. Comments must be emailed to Treasury at Commentdraftlegislation@treasury.gov.za
Click here to download the draft regulations.
