The South African central bank has appealed a High Court ruling that criticized its use of an outdated exchange control law to regulate cryptocurrencies.
Central Bank Says High Court Erred
The South African Reserve Bank (SARB) has appealed a High Court ruling that criticized the central bank’s reliance on an outdated exchange control law to regulate cryptocurrencies. In its appeal filed June 2, SARB asserts the High Court erred when it ruled in favor of Standard Bank, a local financial institution aggrieved by the central bank’s decision to seize bitcoins belonging to its client.
According to a Moneyweb report, the South African central bank contends the client in question, Leo Cash and Carry, used crypto as part of a scheme “to directly or indirectly export funds, foreign currency, and capital from the Republic” when it transferred 4,400 bitcoin to the Seychelles-based exchange Huobi. The central bank, the report added, took issue with the court’s determination that cryptocurrency is not money or foreign currency from an exchange control perspective.
As reported by Bitcoin.com News, Pretoria High Court Judge Mandlenkosi Motha rejected the notion that cryptocurrency is money. He also questioned if the Exchange Control Regulation, enacted in 1961, is “fit for purpose” to regulate cryptocurrencies. Motha suggested that the apartheid-era legislation cannot be used to regulate cryptocurrencies, which have only been in existence for 15 years.
However, in its appeal, the South African central bank contends Regulation 22C of exchange control law allows SARB to block transactions it deems to be in violation of regulations, hence the High Court erred in its ruling. The central bank insists Standard Bank’s application would have been dismissed had the court not erred in making its ruling.
Reacting to SARB’s decision to appeal the High Court ruling, Harry Scherzer, CEO of Future Forex, blamed the central bank for permitting a situation he said rendered exchange control regulations redundant.
“It was relatively clear that the Reserve Bank made an error in the sense that it allows people to evade exchange control which basically makes the whole of exchange control redundant, because you can essentially take out as much money as you want as crypto and send it into dollars abroad, and I’m sure there are some people that did exactly that,” Scherzer was quoted as saying.
The CEO, however, lauded SARB’s decision to swiftly appeal the ruling, a move that effectively returns South Africa to the status quo.
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