Cryptocurrency & State Overreach

South Africa should be building on its world-renowned Bitcoin payments economy, not strangling it with exchange-control bureaucracy.

Photo by Art Rachen on Unsplash

Written By: Gareth de Vaux

Considering the South African Treasury’s updated Exchange Control draft regulations, published on 17 April 2026, it’s pertinent to revisit the origins of bitcoin. These regulations effectively compel you to store your bitcoin (and other “capital”) with state-approved institutions, to transact with approval from the Treasury for stated purposes, and to be subjected to warrantless search and seizures if suspected of contravention. If you’d like to comment on these regulations you can email commentdraftlegislation@treasury.gov.za and commentdraftregulations@treasury.gov.za before 30 June 2026.

Bitcoin wasn’t the first cryptocurrency. Previous attempts at crypto/alternative currencies, such as e-gold, The Liberty Reserve and The Liberty Dollar, were shut down and their founders prosecuted, typically for unlicensed money transmitting – which really means facilitating transactions that are hard to track and thus hard to tax.

Bitcoin’s founder, Satoshi Nakamoto, found a way to create a cryptocurrency that doesn’t rely on a centralised institution which could be shutdown. It is still, and will likely continue to be, the only cryptocurrency that is decentralised, despite thousands of copycats. For the first time in history, it allows ordinary people to hold an asset that can’t be confiscated, can’t be debased and can’t be prevented from transferring.

The state’s primary power stems from issuing and controlling a national currency. With tax and legal tender laws, we are corralled into its economy, from which it can then spend recklessly and dump the ensuing inflation on its citizens.

Bitcoin allows you to opt out of this system and direct your economic power where you choose. Incidentally, South Africa has been leading the world in terms of bitcoin adoption ‘on the ground’ – spending bitcoin at local merchants. Numerous companies (paying tax), thousands of jobs, and a vibrant economy has sprung up in the past few years around this. These regulations will severely hamper, if not destroy, this effort.

Bitcoin and bitcoin providers (“Crypto Asset Service Providers”) are already regulated in South Africa. This is an attempt to regulate cross-border payments in the SARB’s continued communistic efforts to control where we deploy our capital, even after we’ve surrendered every type of tax on it. The bitcoin blockchain, however, is stored on thousands of servers internationally – it exists simultaneously globally; it doesn’t cross borders. A bitcoin wallet cryptographically signs the proof of ownership to facilitate a transaction whereby the global ledger is updated, but bitcoin didn’t move geographically.

Likewise, if you memorise the seed phrase to your wallet, cross a border, regenerate the wallet with your seed phrase on the other side you will then have access to your global bitcoin again, like checking your email whilst abroad. Bitcoin did not cross the border. Bitcoin didn’t move at all. This is the difficulty Treasury and the SARB are facing, which is only a difficulty if you’re unsettled by your citizens having property rights.

If something like these regulations is passed it will likely crush our world-renowned bitcoin payments economy, but the original bitcoin thesis is and always will remain intact – the state can’t stop you using bitcoin. Bitcoin, properly managed, is near-invisible to the state, and if connected to you it can’t be expropriated. Granted, you could be coerced but Bitcoin is the only asset that you have to willingly hand over – it can’t be seized.

It is worth taking the time to learn how to acquire and store bitcoin without using the state-approved providers which track and control your bitcoin. The Canadian vaccine mandate protestors found this out the hard way in 2022, when their Bitcoin was frozen on institutional exchanges for annoying the state. Likewise, using proper wallet management and operational security during transactions can maintain your privacy.

Bitcoin was designed as peer-to-peer cash. It is a bearer instrument that can be simultaneously transferred at the speed of light across the globe. It has the lowest (and monotonically decreasing) rate of inflation of any asset, including gold, so acts as the ultimate form of savings, yet also facilitates secure, uncensored payments near-instantly across the internet.

In the final stages of a long-term debt cycle, with unprecedented leverage ratios, we are at greater risk of paper asset write downs, or increasing currency debasement to prop them up, as the system desperately tries to normalise towards reality. Bitcoin is the lifeboat. It protects against these growing risks of deflation and inflation – it has no counterparty risk and thus can’t be written down/bailed in, and it can’t be unilaterally printed by governments trying to bail themselves out of trouble.

It gives us the freedom to save and transact on our terms back, and it puts a limit on how much the state can grow. But it only works if we use it as designed, in self-custody, and resist the state’s intimidation.

Gareth de Vaux is an Associate of the Free Market Foundation.