South Africa draft forces crypto key disclosure, punishes refusal

South Africa’s National Treasury has published the Draft Capital Flow Management Regulations 2026, which would fold crypto assets into the country’s capital control framework and replace exchange control rules from 1961. The draft would require residents to declare cryptocurrency holdings above a threshold set by the finance minister and would make refusal to hand over passwords, PINs or private keys a criminal offence punishable by fines up to R1 million or up to five years in prison.

Regulation 25(5) in the draft grants enforcement officers the power to compel any person to provide passwords, PINs or private keys needed to access crypto wallets. Residents holding Bitcoin or other cryptocurrencies above the minister-set threshold would have 30 days to declare those holdings. The draft also requires larger transfers to be routed through an authorised provider and bars export of crypto without Treasury permission. Officials would have search-and-seizure powers at ports of entry and exit.

The draft extends capital controls beyond existing steps by the Financial Sector Conduct Authority, which licenses crypto exchanges under the Financial Advisory and Intermediary Services Act. Treasury framed the proposals as a response to concerns about the effect of stablecoins on the rand and changes to the tax treatment of crypto amid growing adoption in sub-Saharan Africa.

Two notices set different deadlines for public comment, creating uncertainty for stakeholders. Treasury’s media statement lists a 10 June 2026 deadline for written submissions, while a Government Gazette notice specifies a 30-day comment period that would close on 18 May 2026. The inconsistency leaves unclear which timetable applies.

Legal observers have raised constitutional and property-rights concerns. Some argue that compelled disclosure of private keys could conflict with Section 35 protections against self-incrimination and with Section 25 property rights. Observers note the draft resembles recent UK compelled-disclosure powers but extends authority by giving border officers the ability to demand keys and seize devices.

Gareth Jenkinson described the proposals as “the apparatus of control doing its best to prevent us from using decentralized money.”

Treasury has not yet published the threshold amounts or a full definition of an authorised provider. Submissions during the comment period are expected to shape the final scope and implementation details.