Market News

Judge Criticizes Central Bank for Relying on Outdated Laws to Regulate Crypto

A South African judge has openly criticized the South African Reserve Bank (SARB) for utilizing apartheid-era laws to regulate cryptocurrency.

In a recent ruling, Judge Mandlenkosi Motha labeled these exchange control laws as antiquated and unfit for dealing with modern cryptocurrencies.

He emphasized that SARB could no longer use the 1961 Exchange Control Regulations, originally designed to prevent capital flight, as a basis for crypto regulation.

Motha pointed out that cryptocurrencies have existed for over 15 years, indicating that the central bank has had ample time to adapt its regulatory framework.

The controversy arose from a case where Standard Bank took issue with SARB's decision to seize assets related to a client’s cryptocurrency transactions.

The bank claimed that the Excon Act does not encompass cryptocurrencies, thereby rendering SARB's enforcement actions unjustified.

Judge Motha also questioned whether cryptocurrencies qualify as money, stating they fail to meet the necessary criteria.

He described the classification of cryptocurrency as money as “strained and impractical,” calling for a more appropriate regulatory approach.

This ruling highlights the urgent need for South Africa to modernize its financial regulations in light of the rapidly evolving crypto market.

As the digital economy grows, the challenge for regulators will be to strike a balance between control and innovation.