Your Action Required: Draft Capital Flow Management Regulations 2026
At VALR we are committed to keeping our customers fully informed about regulatory developments that affect the South African crypto asset sector. National Treasury has published draft Capital Flow Management Regulations, 2026, for public comment. We believe it is important that you understand the proposed Regulations and have the opportunity to contribute constructively.
What’s happening
National Treasury published the draft regulations in the Government Gazette on 17 April 2026. The proposed draft regulations will replace the 1961 Exchange Control Regulations and bring crypto assets formally within South Africa’s capital flow management framework. The stated aim is to modernise oversight of cross-border flows, address gaps in crypto transactions and strengthen reporting on larger activities. This builds on existing FSCA and FIC requirements.
What does this mean
VALR fully supports the objectives of financial stability, consumer protection and combatting money laundering and illicit financial flows. However, we have concerns that the draft regulations are overly restrictive and could unintentionally harm legitimate crypto activity.
For our customers, the proposals would mean:
Buying, selling, lending or transferring of crypto assets above a threshold (to be set by the Finance Minister and not yet defined) would need to be conducted through authorised crypto asset service providers.
Mandatory written declarations would be required within 30 days for holdings or entitlements to crypto assets, stating when and how the crypto asset was acquired and where it is held.
Crypto asset transactions will require a stated purpose, and using crypto assets outside of that purpose would trigger a mandatory sale.
Self-custody would likely remain possible below the undefined threshold, but activity at meaningful scale could become more restricted without using licensed intermediaries.
Authorities (including border control) would also gain powers to search individuals, demand declarations and seize assets from individuals suspected of violating the rules.
In the case of forfeiture, crypto asset holders would be mandated by law to “furnish full particulars in writing of all and any passwords, personal identification numbers, or codes which are necessary to enable National Treasury to obtain access to and control over the crypto assets and their disposal.”
Contravention of these proposed regulations could result in a R1,000,000 fine and five years imprisonment.
We believe these provisions are overly restrictive and undermine the nature of crypto assets and the practical exercise of self-custody rights. VALR will engage with regulators and submit detailed, constructive comments aimed at shaping a balanced and practical framework for the benefit of all South Africans.
Our comments
VALR plans to submit its detailed written submissions to the National Treasury as part of the public consultation process.
At the outset, VALR supports the broader goals behind the proposed framework, including financial stability, consumer protection and stronger measures to combat illicit financial activity. At the same time, we believe there are several areas where additional clarity and practical refinements are necessary to ensure the regulations work effectively in practice for both customers and the broader South African crypto industry.
Below are some of the high-level themes we intend to raise as part of our engagement with the National Treasury.
The South African crypto asset landscape. It is important to preserve the progress South Africa has already made in building a responsible and well-regulated financial and crypto industry. South Africa already has an established framework through the FSCA and FIC, including CASP licensing, supervisory oversight and AML/CTF measures such as the Travel Rule. The local crypto sector now supports jobs, investment, innovation and growing financial access for millions of South Africans. Future regulations should continue building on this foundation in a coordinated and practical way, while supporting continued innovation and regulatory clarity across the industry.
Some parts of the draft regulations do not fully reflect how crypto exchanges operate in practice. For example, certain provisions will unintentionally affect how licensed exchanges facilitate customer trading, access global liquidity providers and support efficient pricing for users. The draft regulations appear to assume that exchanges buy and sell crypto assets directly to customers, when most licensed exchanges operate through matched order books where customers trade with each other. Certain provisions could also restrict access to foreign market makers and global liquidity providers - that are essential for deep liquidity and efficient pricing. We support a framework that could best accommodate the practical realities of crypto markets while still supporting appropriate oversight and consumer protection, through a practical, risk-based and reporting-led approach.
The draft regulations create uncertainty around decentralised finance (DeFi) and newer blockchain technologies. Participation in certain DeFi applications could be prohibited or severely restricted. In practice, this could affect customers who use self-custody wallets, decentralised applications, crypto payment services or blockchain-based financial products that operate across global networks. Many DeFi protocols do not have an identifiable intermediary or permission-granting party, yet the draft regulations appear to require transactions to occur through authorised intermediaries, which may make lawful participation in DeFi practically impossible. We encourage further clarity that supports innovation while maintaining appropriate safeguards and regulatory oversight.
Certain reporting, approval and enforcement requirements will be difficult to apply practically to everyday crypto activity. For example, some provisions will unintentionally create additional friction for routine crypto transfers, cross-border payments or customers receiving income through global digital platforms. Certain provisions also appear to require permission or reporting obligations even for ordinary transactions between South African residents where there is no perceived nor actual cross-border element. In addition, certain search, seizure and disclosure powers - including provisions relating to being compelled to share passwords and access credentials in certain circumstances - raise practical and constitutional concerns. We intend to engage constructively on how a more proportionate, risk-based and reporting-led approach could help focus regulatory attention on higher-risk activity while minimising unnecessary friction for legitimate customers.
Clarity is required around common crypto use cases such as crypto payments, self-custody and participation in global crypto networks. For example, it is currently unclear when crypto assets are considered to be ‘inside’ or ‘outside’ South Africa, and whether ordinary transfers between a customer’s exchange account and their own private wallet could be treated as exports of capital. In practice, overly restrictive requirements may encourage activity to move toward offshore platforms, peer-to-peer markets or unsupervised channels, reducing visibility within the regulated environment rather than improving it. Greater clarity would help customers and businesses better understand how the framework applies in real-world situations while supporting continued regulatory oversight. We support a framework that instead focuses on genuinely high-risk activity rather than unintentionally capturing ordinary domestic crypto use.
Continued contribution toward a responsible crypto regulatory framework that supports innovation, investment and financial inclusion in South Africa. VALR will continue contributing to a responsible crypto regulatory framework that supports innovation, investment and financial inclusion in South Africa. It is important that South Africa remains competitive as financial technology continues to rapidly evolve globally, including in areas such as AI-enabled financial services and blockchain-based payment infrastructure, stablecoins and tokenisation, and that the regulations reflect this. Certain parts of the draft regulations, if implemented in their current form, will undoubtedly undermine this progress by making it significantly more challenging for licensed South African crypto businesses to operate competitively.
VALR remains committed to constructive engagement with National Treasury, the South African Reserve Bank and other regulators throughout this process. Continued collaboration between regulators and industry is critical to help build and shape a practical and globally competitive crypto regulatory framework for South Africa.
How you can act now
The deadline for public comment submission is approaching quickly. We strongly encourage you to review these draft regulations and submit your own comments to the National Treasury at Commentdraftlegislation@treasury.gov.za before the 30 June 2026 deadline.
The draft regulations are available on the National Treasury website.
Your input matters. We value your trust and continued participation as we work together towards regulation that supports innovation, financial inclusion and South Africa’s competitiveness on the global stage while protecting our financial system.
