South Africa floats sweeping crypto capital controls, including potential forced conversions

South Africa's National Treasury and the South African Reserve Bank have published draft Capital Flow Management Regulations that would sharply tighten rules on cryptocurrency activity. The proposal would require investors to declare crypto holdings above a threshold that has not yet been specified. It also envisages the state being able to compel holders to sell qualifying crypto assets in exchange for rand. Under the draft framework, individuals would be barred from buying, selling, lending or transferring crypto above the threshold without prior authorisation, unless transactions are conducted through approved service providers. Users would need to state a purpose for each transaction, and using funds outside the declared purpose could trigger a mandatory resale. The draft rules would also prohibit cross-border transfers and payments using crypto without approval. Regulators would be granted expanded enforcement powers, including the ability to search individuals, demand declarations and seize assets suspected of breaching the regulations. Critics argue the measures raise constitutional issues related to privacy, property rights and freedom of association, describing them as some of the most aggressive proposed changes to South Africa's decades-old exchange control regime.