Latest news with #ExchangeControlRegulations
IOL News
25-07-2025
- Business
- IOL News
Steinhoff forfeits R6. 3bn to settle long-standing battle with SA Reserve Bank
Steinhoff International used to own a vast portfolio of retail brands and companies, mostly in the furniture and household goods sectors, as well as manufacturing facilities and operations in Europe, Africa, Asia, the US, Australia, and New Zealand. Image: Henk Kruger/Independent Newspapers The South African Reserve Bank's (Sarb's) seven-year probe into now defunct Steinhoff's alleged breach of Exchange Control Regulations has finally been concluded with an agreement that what is now Ibex Group will no longer try recoup a previously forfeited R6.3 billion. In a statement released on Thursday, the central bank said that it and Ibex Group had resolved all the disputes between the two parties in a 'comprehensive settlement'. 'Both Sarb and the Ibex Group consider the settlement reasonable, proportionate and justifiable in light of the complex and competing interests,' the central bank's statement said. 'Sarb and the Ibex Group consider this final settlement to be in the best interests of South Africa,' it added. The Sarb said that the deal followed it having taken legal advice, considered the public interest, its mandate in terms of forex, investor confidence in South Africa, and promoting regulatory certainty by allowing the Ibex Group to settle its contractual obligations to its foreign financial creditors, it had agreed to settle the matter. The deal allows Ibex to settle Sarb's enforcement action by ceasing litigation over R6.3 billion – plus interest – of funds that had already been forfeited to the state. At the same time, SARB has granted permissions for Ibex to implement its Dutch court-approved winding down the remaining Steinhoff business units that it did not take over. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Former parts of Steinhoff that are now held by Ibex Holdings includes stakes in Pepkor, in addition to Mattress Firm and Pepco. While Ibex, which is based in Netherlands, is not a public company, Pepkor, Mattress Firm, and Pepco are listed in various jurisdictions. Steinhoff collapsed in what is South Africa's largest corporate explosion after Deloitte's revelations that there were accounting anomalies, which resulted in Steinhoff losing 97% of its market capitalisation between August 2017 and March 2019 as investors fled. At the time Steinhoff went bust, it owed more than R155bn to creditors, said Sarb. 'This company crisis threatened the Steinhoff Group's continued existence and risked consequences, including forced asset sales or 'fire sales', significant losses to South African and foreign financial institutions and investors, and extensive job losses in South Africa and abroad,' said Sarb. The Sarb added that the crisis also risked significantly affecting South Africa's reputation as one of the most robust and well-regulated financial markets in the world. To prevent an uncontrolled liquidation and mitigate the financial distress facing the Steinhoff Group, debt restructuring and settlement processes were implemented across several jurisdictions between 2018 and 2023. 'These processes resulted in the Steinhoff Group fully repaying over R28bn owed to South African banks in 2018 as well as compensation to other South African investors amounting to approximately R18.5bn as part of the global settlement,' said Sarb. The global settlement, in total, was worth around R29.6 billion at the time and was approved and sanctioned by international and local courts. South Africa's largest fund manager, the Public Investment Corporation, was one of the main global settlement beneficiaries. A PwC investigation found that, in total, €6.5bn – or R134bn – illegitimately went through Steinhoff's books between 2009 and 2017 until the news of South Africa's biggest corporate scandal emerged. Steinhoff International used to own a vast portfolio of retail brands and companies, mostly in the furniture and household goods sectors, as well as manufacturing facilities and operations in Europe, Africa, Asia, the US, Australia, and New Zealand. The former company is still named in an alleged price-fixing matter involving PG Bison – then indirectly owned by Steinhoff – and a firm with which it should have been in competition, Sonae, which proceeded to the Competition Tribunal in April. BUSINESS REPORT
IOL News
24-07-2025
- Business
- IOL News
Steinhoff forfeits R6. 3bn to settle long-standing battle with SARB
The South African Reserve Bank's (SARB's) seven-year probe into now-defunct Steinhoff's alleged breach of Exchange Control Regulations has finally been concluded with an agreement that what is now Ibex Group will no longer try to recoup a previously forfeited R6.3 billion. In a statement released on Thursday, the central bank said that it and Ibex Group had resolved all the disputes between the two parties in a 'comprehensive settlement'. 'Both SARB and the Ibex Group consider the settlement reasonable, proportionate and justifiable in light of the complex and competing interests,' the central bank's statement said. 'SARB and the Ibex Group consider this final settlement to be in the best interests of South Africa." SARB said that the deal followed it having taken legal advice, considered the public interest, its mandate in terms of forex, investor confidence in South Africa, and promoting regulatory certainty by allowing the Ibex Group to settle its contractual obligations to its foreign financial creditors, it had agreed to settle the matter. The deal allows Ibex to settle SARB's enforcement action by ceasing litigation over R6.3 billion – plus interest – of funds that had already been forfeited to the state. At the same time, SARB has granted permissions for Ibex to implement its Dutch court-approved winding down of the remaining Steinhoff business units that it did not take over.
Mail & Guardian
12-07-2025
- Business
- Mail & Guardian
High court rules that cryptocurrency is not money
Cryptocurrency was first introduced to the global market in 2009, with its most well-known form being bitcoin On 15 May, the high court handed down a landmark judgment in the case of . The judgment addressed the position of cryptocurrency assets in light of South Africa's Exchange Control Regulations. Cryptocurrency was first introduced to the global market in 2009, with its most well-known form being bitcoin. In an October 2024 publication by the South African Revenue Service it was estimated that more than 5.8 million South Africans hold a crypto asset. As new technologies emerge, the government faces several challenges in determining how to integrate them into existing legislation. This article examines an application by Standard Bank to set aside a forfeiture order issued by the Reserve Bank against Leo Cash and Carry (LCC), following multiple cryptocurrency transactions that allegedly violated the South African Exchange Control Regulations. The judgment is being taken on appeal by the Reserve Bank after it was ruled that cryptocurrency is not subject to the regulations. The high court analysed the legality of a forfeiture order issued in respect of R16 404 700.37 and R10 000 000, which was due to Standard Bank, in accordance with a prior pledge and cession agreement concluded between the bank and LCC. The forfeiture order follows an investigation from the central bank's financial surveillance department which found that LCC had contravened exchange control regulations. Passed in 1961, the exchange control regulations promulgated in terms of section 9 of the Currency and Exchange Act, aim to discourage the export of capital from South Africa and protect the economy. The court in South African Reserve Bank vs Leathern N.O . and Other held that the purpose of the regulations are threefold: to prevent loss of foreign currency resources through the transfer abroad of financial capital assets held in South Africa; to ensure effective control of financial and real assets in and out of the country and to avoid interference with the commercial, industrial and financial systems of the country. It is apparent that the legislative intent of these regulations is protective and forward-looking, which may support an expansive interpretation that includes digital finance instruments. In the matter before the high court, Standard Bank provided multiple arguments as to why they felt that cryptocurrency is not subject to these provisions. While logically sound, the arguments undermine the purpose of the legislation and the economic stability the regulations were designed to preserve. When assessing Standard Bank's claim, the high court swiftly dismissed the claim for R10 million held in a Nedbank account, ruling that it does not have legal standing to challenge this claim and thereafter only considered a claim for R16 404 700.37 which was held in a money market account. The key to Standard Bank obtaining judgment and setting aside the forfeiture order was proving that LCC had not contravened any exchange control regulations in dealing with cryptocurrencies — enabling them to successfully cede the monies as per their agreement with LCC. In doing so, Standard Bank argued that cryptocurrency is neither a currency nor legal tender in South Africa and, consequently, the regulations did not apply to it. Further to this argument, it argued that definitions in the regulations should be given restrictive interpretation and only if the legislation was amended to include cryptocurrency would it be subject to the regulations. Taking the argument even further, the bank argued that cryptocurrency was not capital and that it could not be applied to the exchange control regulations without a dedicated framework regulating cryptocurrency as an asset. At this point, one might ask why Standard Bank felt cryptocurrency was not money or a form of capital. In answering this, the bank submitted that the fundamental difference is that, when one purchased cryptocurrency, a blockchain recorded your purchase, and the record of this purchase would be stored on thousands of computers globally. In addition, the transfer of cryptocurrency to another was not payment. It was argued that, in this sense, cryptocurrency was not a sum of money. On the other hand, the Reserve Bank's argument attempted to future-proof regulation in light of the digital economy, arguing for the acceptance of cryptocurrency in the exchange control regulations. In doing so the central bank argued that both the PwC report on which the investigation into LCC was made, and the allegations made against LCC, were uncontested. Drawing from South African Reserve Bank vs Leathern N.O , the Reserve Bank submitted that, because there was a reasonable suspicion of a contravention, the high court was not entitled to set aside the blocking order. In response to the argument that cryptocurrency was not subject to the regulations, the Reserve Bank argued that a contravention of regulation 3(1)(c) did not require a payment or the identity of any receipt. Furthermore, that cryptocurrency was covered by the regulations, noting that in the definitions of the regulations, money was defined as 'foreign currency or any bill of exchange or other negotiable instrument'. Counsel for the respondents (the central bank and others) argued that cryptocurrency was an instrument which permitted payment in currency, which is not a legal tender in South Africa. In highlighting the importance of regulating cryptocurrency under exchange control regulations, the Reserve Bank submitted that when rands are paid into a South African cryptocurrency wallet, the rands would become cryptocurrencies, and the rand value would be lost from the South African balance sheet. Subsequently, in a foreign jurisdiction that cryptocurrency enabled the holder of the cryptocurrency to withdraw a sum of money equal to that cryptocurrency, operating as a form of payment. Last, when considering whether Standard Bank was entitled to the funds in the money market account, the Reserve Bank argued that Standard Bank was not entitled to the money because in terms of the cession and pledge agreement between the Standard Bank and LCC, express consent was required to realise any collateral held by Standard Bank. In reviewing the arguments presented before the high court, Judge MP Motha noted that it was undeniable that the LCC was involved in a scheme to directly or indirectly export funds, foreign currency and capital from South Africa. The court set out the extent of the LCC's transactions, noting that during 2019 LCC sent 4 405.9783 of bitcoin, amounting to R556 020 356, 68, to Huobi Global and concluding that it was therefore incontrovertible that the LCC partook in cryptocurrency transactions. The court highlighted that the answer lies in one's interpretation of the word 'currency' and held firm that cryptocurrency is not money. It noted that trying to view cryptocurrency as money leads to strained and impractical results and, if it were to be viewed as money, cryptowallets would be attached in terms of regulation 22B. Some of the practical questions raised by the court were whether one can deposit cryptocurrency and whether one must declare it when entering or leaving South Africa. T he judge held that, on any interpretation, cryptocurrency fell outside the ambit of capital in regulation 10(1)(c) and that, as Standard Bank argued, a regulatory framework dedicated to addressing cryptocurrency is overdue. He cited a published paper by the Reserve Bank itself highlighting the lack of a proper regulatory legal framework, specifically highlighting that 'there is no regulatory protection that would compensate the owner or user of cryptocurrency for any loss that may be suffered'. Considering the above, the judge held that LCC did not contravene any regulations and the forfeiture of the money held in the money market account was set aside. On 23 May, the Reserve Bank filed an application for leave to appeal, seeking to overturn the ruling. Its main argument is that the high court should have concluded that, although not considered money, cryptocurrency could, at the very least, be seen as 'capital', triggering the provisions of regulation 10(1)(c). As a result of the appeal, section 18(1) of the Superior Courts Act provides that the court's decision is suspended, pending the outcome of the Reserve Bank's application for leave to appeal. Given this prevalence, the ruling has profound implications, not only for financial institutions and regulations, but also for citizens whose assets may be subject to the regulations. Without legislative intervention, the South African government could find itself powerless in monitoring and regulating the significant volume of digital wealth cryptocurrency holds. Charlise Finch is a candidate attorney and Raffique Motala is a director at Herold Gie Attorneys.
IOL News
17-06-2025
- Business
- IOL News
Navigating the cryptocurrency landscape: Insights from Binance's Hannes Wessels
Binance, shares insights on the challenges of crypto regulation in South Africa. Image: AFP In a wide-ranging interview, Hannes Wessels, General Manager for Southern and Francophone Africa at Binance, the world's largest crypto exchange by trading volume, said while South Africa's conduct regulator, the Financial Sector Conduct Authority (FSCA), has made strides by extending existing financial advisory frameworks to crypto firms, the process remains under-resourced and delayed." "I do believe, though, that a lot more work needs to happen to tailor regulation specifically for crypto asset service providers because our business is very different from, say, insurance brokers," he said. 'We're in the last batch of firms still waiting for our crypto license approval,' Wessels said. 'The FSCA has good people who know what they're doing, but they're simply under-resourced. You can only do so much with the bandwidth you have.' Wessels touched on the case of Standard Bank. Last month in a judgment handed down in the North Gauteng High Court, Judge Mandlenkosi Motha ruled that the Exchange Control Regulations, introduced in 1961, cannot be applied to cryptocurrencies. In his judgment, he wrote 'a regulatory framework addressing cryptocurrency is long overdue'. He noted there is a clear lack of regulation of digital assets, despite their existence since 2009. The case in front of the High Court involved Standard Bank, against the South African Reserve Bank (SARB) and others, and focused on whether cryptocurrencies such as Bitcoin fall within the scope of the existing exchange control regulations. Judge Motha noted that the existing regulations do not permit 'an unnatural and fictitious reading' to include cryptocurrencies. Wessels said, "As we saw in the Standard Bank judgment, the judge was quite clear in saying the SARB didn't move fast enough in the treatment of crypto assets as an exchange-controlled asset." Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ He said regulation plays an important role in unlocking the potential of blockchain. Binance believes in a balanced approach, one that protects consumers while enabling innovation and attracting investment. As part of this commitment, Binance works closely with the Virtual Assets Chamber to support clarity in digital asset regulation. This includes engagement on key policies such as the Virtual Asset Service Providers (VASP) Bill, which presents an opportunity to create a secure and structured environment for the industry to thrive. Footprint in Africa Wessels said Binance was present in most countries simply because Binance is in the App Store and "anyone can download it". But only a few countries in Africa have a regulatory framework for crypto. Besides South Africa, Binance is looking at Nigeria, Kenya and Ethiopia. "If you look at population numbers and GDP, and the sophistication of the banking system—that's key for us," he explained. Education and trading safely In talking about market penetration, one needed to talk about education and trust, he said. "People tell me about mobile penetration, but almost all African countries are at parity. That's not the issue. We spend a lot of resources on education. You may know about Binance Academy - it's free and accessible on mobile. We've got almost 370 topics, from basic 'What is Bitcoin?' to complex stuff like Web3," Wessels said. People needed to understand what they were getting into when buying crypto and not falling for scams. Wessels said there were scammers using Binance branding on Zoom calls claiming to be consultants. "They convince users to send funds to fraudulent addresses." People must stay in the Binance app to be safe. "That's your safety net. Don't deal outside the secure ecosystem. If you're unsure, double-check," he said. Binance has over 750 people dedicated to cybersecurity - out of a global workforce of around 6 000–7 000, that's over 10%. Wessels said the company was constantly evolving to deal with cyber attacks and improve security. Trump and crypto momentum Wessels explained that US President Donald Trump's focus seems more on adoption of crypto than regulation. "He's promoting strategic crypto reserves, which is smart," he said. Many governments are realising there's fragility in fiat, Wessels said."In Covid-19, losses were socialised and profits privatised. Fiat currencies, including the South African rand, are losing value against the dollar. Governments are starting to see Bitcoin as a hedge. Bitcoin's decentralised, finite, and has never been hacked." BRICS and stablecoin Wessels' remarks come as BRICS countries, including South Africa, continue efforts to reduce dependence on the US dollar. With the BRICS bloc expanding to over a dozen member nations and intensifying calls to de-dollarize trade, digital assets and stablecoins are now being floated as potential reserve alternatives. 'There's a conversation to be had about a BRICS stablecoin or basket reserve, but it's complex,' said Wessels. 'How do you weight a basket of 16 currencies, when China and India are GDP superpowers? Is it going to be dominated by the yuan and rupee, and if so, what incentive is there for smaller players like South Africa?' Cautioning against hasty solutions, Wessels referenced the collapse of algorithmic stablecoin TerraUSD (LUNA) in 2022. "If it's not fully collateralised and transparent, you risk a systemic failure." Despite the structural hurdles, Wessels believes blockchain-based currencies could eventually help South Africa modernize cross-border payments and remittances, especially given the inefficiencies of the traditional financial system. 'Right now, if you want to send money from here to China, it has to go through New York, and that takes up to two weeks. With crypto, the same transfer can be instant. That's a game-changer.' Crypto's Growing Pains Despite optimism, Wessels acknowledged that crypto is still maturing — not just technologically, but culturally and institutionally. Referencing Metcalfe's Law, he described crypto adoption as following a 'hyperbolic curve,' driven by network effects and accelerated by institutional buy-in. "Crypto adoption is like a hyperbolic curve—starts slow, then rapidly grows. I think we're in adolescence. Depending on institutional and government adoption, we'll move into early adulthood. But I think we have another 10–15 years before it matures fully," he said. Wessels said early adopters were better placed. Institutions like BlackRock and Fidelity are making crypto familiar. "There's no magic behind Bitcoin ETFs—they just buy Bitcoin and let people buy shares. But custody is the key differentiator. People trust familiar names. I think we'll see baskets of tokens, like top 10 cryptos, becoming more common," he said. User profile Generation Alpha (demographic group born between 2010 and 2024) and Gen Zs (born during the late 1990s and early 2000) are the fastest adopters of crypto. The Alphas and the Gen Zs. And they look at the traditional banking system - or "the fiat system," as they call it - with some skepticism. They say, "Hang on, this is not really made for me." Crypto looks more feasible to them.
Coin Geek
30-05-2025
- Business
- Coin Geek
South Africa: Digital assets not subject to forex controls
Getting your Trinity Audio player ready... Digital assets are not capital or currency and are not covered by South Africa's foreign exchange controls, a local court has ruled. The high-profile court case pitted Africa's largest lender, Standard Bank (NASDAQ: SBGOF), against the South African Reserve Bank (SARB) and a local firm, Leo Cash & Carry (LCC). The central bank had seized over $1 million held in a Standard Bank account by the firm, which had been declared insolvent. Standard had placed a hold over the funds as the client owed an overdraft facility extended years ago. However, the central bank declared the funds in the account as forfeited to the state as, before it collapsed, LCC had purchased $37 million worth of BTC and transferred it abroad without official authorization, breaching forex laws. Standard Bank's legal team argued that 'crypto' is neither currency nor legal tender in South Africa, so the Exchange Control Regulations didn't apply. In his ruling, Judge M.P Motha sided with Standard Bank, and according to him, 'The answer lies in one's interpretation of the word currency.' 'Cryptocurrency is not money. The construction that cryptocurrency is money, by looking at the definition of money which includes foreign currency, is strained and impractical,' the Pretoria High Court judge ruled. The judge further ruled that 'crypto' 'falls outside the ambit of capital.' The judgement means that any flow of digital assets outside South Africa does not fall within the scope of the country's 'austere exchange control framework – at least for now,' says the local division of American law firm Baker McKenzie in its analysis. Wiehann Olivier, the head of digital assets at consulting firm Forvis Mazars, concurs, noting that the ruling creates a loophole that allows unlimited external transfers of digital assets. 'Currently, you can externalize as much cryptocurrency without any limitation as imposed from the exchange control perspective,' he told local outlet Moneyweb. 'Regulators will act swiftly' The loophole creates an easy workaround for South Africans seeking to move their money offshore. It also plays into the narrative that global central banks have held for years: that digital assets are used to circumvent capital controls, making them susceptible to abuse and criminal use. Experts expect the South African Reserve Bank to act swiftly and fix the flaw in its system. 'Given the risk this presents to the exchange control system as a whole, such legislative action seems inevitable, and it is likely that the Exchange Control Regulations will be amended in short order,' Baker McKenzie says. Olivier believes that even the central bank wasn't aware of the grey area, otherwise it would have plugged the loophole. 'In the background, [SARB] will most likely be making amendments to the exchange control regulations going forward, probably in the next 12-18 months because of the significance of the fact that you can externalize so much money without oversight,' he stated. The primary factor that supported the ruling is that the SARB, like most other central banks, has clarified that digital assets are not legal currencies. Even in pro-crypto nations like Russia, digital asset payments remain prohibited. This oversight could prove costly for South Africa as residents could purchase digital assets en masse and use them to send money offshore unchecked. The need for digital asset regulations in South Africa South Africa has the continent's most advanced digital asset laws, which has allowed regulators to issue licenses to over 200 VASPs. However, the ruling has exposed some of the gaps that still exist. In his ruling, Judge Motha noted that at this point, regulators could no longer claim digital assets as a nascent sector as their defense. 'Cryptocurrency has been in existence for over 15 years, one cannot say SARB has been caught napping,' the judge noted. Desiree Reddy, the South African director at global law firm Norton Rose Fulbright, noted, 'The decision underscores the pressing need for legislative reform to provide clarity and certainty in this rapidly evolving area.' Watch: Tech redefines how things are done—Africa is here for it title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="">
