Yesterday there was another high court ruling with regard to crypto and this ruling was different to the one handed out on May 15th. I will get to these rulings in a moment and how they differ which only highlights how complex non crypto people are making crypto. The judges may be smart in their legal fields, but when it comes to crypto they need to stay in their zone of specialty because crypto is so different on so many levels one needs to fully understand how it can be regulated.
There have been two crypto rulings in the high court recently and what is obvious is those being caught doing things wrong with their crypto are not innocent parties and have used crypto as a tool to move illicit funds. This to me is right that they have their assets seized as this is not the likes of you and me who try and stay within the laws even if we bend them slightly.
The court ruling on May the 15th in the case against Standard Bank and the South African Reserve Bank was about a client being Leo Cash And Carry transferring 4400 Bitcoin to a Seychelles exchange. The Bitcoin was valued at around $31 million at the time and you can see the problem here. This Leo cash And Carry was an absolute fool because Bitcoin was being used to move funds out the country and not in a smart way. The route should have been having your Bitcoin in a cold wallet for your own protection and never relying on an exchange to store your coins.
The judge ruled in the banks/clients favor stating that crypto could not be stated as conventional currency using the Exchange Control Regulations due to the fact that crypto is not legal tender. Crypto exists as a digital code and that this was not state issued money.
What this ruling did was highlight that the Exchange Control Regulations did not cover crypto as when these regulations were signed into law digital currencies/assets were not around.
This ruling shocked the SARB and why we saw those drastic rules being put forward last month which stated that they were looking at limiting what crypto investors could hold or more so with the amount one could move onto an international exchange outside of SA borders. Again this highlighted a lack of knowledge with regard to how crypto works and how limited the SARB would be in implementing any laws. From a crypto perspective knowing more than they do they are farting into the wind looking like complete fools.
Now back to yesterdays ruling by another judge in the high court who is again out of his depth with no real understanding of what and how crypto works. The judgement yesterday was with another crypto transaction who used LUNO based accounts in South Africa to send R182 million in crypto to foreign based exchanges outside of SA's reach. The SARB managed to seize R6 million which I would gather was still in the LUNO exchange.
The judge ruled that the crypto was capital with an explanation that any financial asset capable of storing monetary value or a tool for being able to exchange for money was indeed capital. His ruling that if you transfer crypto locally to another exchange then it was an illegal export of capital and that the previous judgement was incorrect in how they saw crypto.
What is crazy is that certain rulings have created more confusion like the NPS act which states that crypto is not legal tender because the SARB only recognizes money for transactions. Crypto was declared a financial product in 2022 more about legitimizing certain exchanges allowing them to provide services. This was never intended to legitimize crypto as a currency.
What this ruling handed out yesterday does is give the SARB certain powers to regulate crypto though having no unregulated export of capital via crypto on digital ledgers.
What these two cases has done as they are similar in their intention as they both sound dodgy in how they acted. These individuals sent money using crypto and just by the nature of the methods used tells you they are up to no good. All this has done is bought in ways of clamping down on everyone else using crypto because of a few bad actors. I am all for regulation of crypto, but it has to be done in such away that it protects crypto and not how the government wants to control it because they are very limited in how they can. Obviously if someone spends millions on crypto in SA and then sends that crypto out the country it is a breach of capital outflow regulations which these idiots did.
We are all waiting on the next phase of crypto regulation as the first proposal was shot down because it was too drastic and some what draconian. The SARB is screwed as we all know someone who wants to send money out the country using crypto can and there are so many ways. The problem is when using the local exchanges you will be flagged which the good news is you have already moved money onto international crypto exchanges then you are in the clear.