The National Treasury in South Africa has postponed the final date for comments on the draft Capital Flow Management Regulations 2026, formerly the Exchange Control Regulations of 1961. The delay is due to the crypto sector’s widespread worry regarding the rules on transactions across borders.
The Treasury said many of the responses were submitted since the publication of regulations on April 17. These concerns were directed at “the treatment, possession and trade of crypto assets, specifically the potential restrictions on cross-border transactions,” they said.
The South Africa Treasury Responds To Concerns About Cryptocurrencies
In a recent media update, the Treasury sought to put the public’s mind at ease. They addressed the possibility of prohibiting or criminalizing the possession of cryptocurrencies in the country through the proposed framework.
The officials explained that the draft regulations “do not intend to criminalise the possession of crypto assets, or to apply the regulations retrospectively.”
The regulator also confirmed that it is preparing a separate draft manual for cross-border crypto transactions. Furthermore, it will put this draft out for public comment soon.
The document will give further guidance to determine which crypto activities are considered cross-border transactions. Thus, it’s subject to capital flow management oversight, the statement said.
The Treasury of South Africa claims that the proposed framework is designed to “enable lawful cross-border crypto asset transactions within clear guidelines.” In addition, it aims to cut down the uncertainty and to protect the financial system.
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Why It Matters For Crypto Community In South Africa
The proposed regulations caused a furor among the South African crypto industry. Netizens fear that it is likely to see the government implement tighter regulations on offshore transfers. Moreover, they expressed concerns on the chances of limiting their access to foreign-held cryptocurrencies.
The Treasury highlighted that the constitutional protections are still in force. It pointed out: “The Constitution protects various rights, including property rights, while also recognising that suspected illicit activities warrant the attention of the authorities.”
Officials of South Africa also denied rumors that it would compel the citizens to hand over their cryptocurrency assets. Further, they also noted that other foreign-denominated assets in their possession are safe.
“The concerns that holders of crypto assets, or even other assets like gold or foreign currency, may in certain circumstances be required to sell these to the state or bans dealing in foreign exchange are misplaced,” the statement said.
Focus On Illicit Financial Flows
The Treasury also said it would be only in a limited situation that it would be forced to sell assets because of criminal activity. It said that citizens of South Africa already have several ways to hold offshore investments and foreign assets. It’s possible as a result of exchange control changes and exemptions over the years.
The draft rules are designed to increase the powers of the authorities to “detect, deter or disrupt illicit financial flows.” In addition, it will supplement existing oversight arrangements over the Financial Intelligence Centre and Financial Sector Conduct Authority.
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