A South African judge has slammed the South African central bank for using outdated exchange control laws from the apartheid era to regulate cryptocurrencies.
Judge: Apartheid-Era Laws Unfit for Cryptocurrency Regulation
A High Court judge has criticized the South African Reserve Bank (SARB) for its continued reliance on outdated exchange control laws to regulate cryptocurrencies. In a recent ruling, Judge Mandlenkosi Motha suggested the SARB has no excuse for using apartheid-era laws to govern cryptocurrencies, which have existed for 15 years.
According to the South African judge, the Exchange Control Regulations (Excon) were enacted in 1961 by the apartheid regime to stem capital flight. Motha questioned if such a law is “fit for purpose” to deal with cryptocurrencies.
“Cryptocurrency has been in existence for over 15 years; one cannot say SARB has been caught napping,” the judge stated. “In the same way, intellectual property rights had a niche carved for them in exchange control regulations, cryptocurrencies need some legislative attention.”
The ruling stemmed from a case in which Standard Bank, a local financial institution, challenged the SARB’s decision to apply provisions of the Excon Act when seizing assets of the bank’s client. The client owed Standard Bank $2.28 million (41 million rand), which the financial institution hoped to recover through liquidation.
As the Mybroadband report notes, Standard Bank was blocked from proceeding with the liquidation after the SARB, through its financial surveillance division Finsurv, seized the unidentified company’s assets. This followed an investigation that determined the client had violated exchange control laws when it bought bitcoins and transferred them to overseas exchanges. However, Standard Bank argued that the Excon Act does not cover cryptocurrencies, therefore Finsurv’s claims of foreign exchange violations cannot stand.
Meanwhile, in addition to chastising the SARB’s reliance on outdated legislation, the High Court judge also challenged the notion that cryptocurrency is, in fact, a form of currency or money. According to the judge, cryptocurrencies fail to meet the standard to be regarded as money.
“Cryptocurrency is not money,” the judge asserted. “The construction that cryptocurrency is money, by looking at the definition of money, which includes foreign currency, is strained and impractical.”
