The Bulk of Crypto Trading Volumes in Africa Are Generated by Institutional Traders

The Bulk of Crypto Trading Volumes in Africa Are Generated by Institutional Traders

“The Bulk of Crypto Trading Volumes in Africa Are Generated by Institutional Traders” explores the significant role that institutional traders play in driving cryptocurrency trading volumes in Africa. Farzam Ehsani, founder and CEO of Valr, a South African crypto exchange, emphasizes that institutional traders, using programmatic trading strategies, account for the majority of crypto trading on the continent. Contrary to the common perception that retail traders dominate the African market, Ehsani dispels this myth by highlighting the sophistication and activity of institutional investors. The article also discusses the progress made by African regulators in understanding and regulating the crypto industry, with countries like South Africa and Mauritius requiring license applications from crypto entities. Additionally, Ehsani touches on Valr’s recent partnership with Visa and its plans to expand its product offerings globally.

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African Regulators Now Have a Better Grasp of Cryptocurrency

While retail traders do account for some of Africa’s traded volumes, the belief that the trading activity of large investors on the continent is insignificant is a myth. Farzam Ehsani, the founder and CEO of Valr.com, a South African crypto exchange, has stated that institutional traders account for the bulk of Africa’s crypto trading volumes. Ehsani specifically mentioned that Valr’s largest volumes are executed via their API by institutional traders deploying a host of programmatic trading strategies.

Additionally, Ehsani mentioned that some of Africa’s financial sector regulators have made great strides in recent years to better understand the crypto industry. This improved understanding has allowed them to put in place regulations to appropriately regulate the industry. South Africa and Mauritius are two countries that have gone as far as asking crypto entities to submit license applications.

Key Factors Driving Crypto Adoption in Africa

There are several key factors driving crypto adoption in Africa. One factor is the slow and expensive traditional banking system. Money in the traditional banking system in Africa is generally slow and expensive to move, especially across borders. This makes cryptocurrencies an attractive alternative for faster and more cost-effective transactions.

Another factor driving crypto adoption is the hedge against currency devaluation. Central banks across Africa, like the rest of the world, are mandated to devalue their own currency over time. Bitcoin and other cryptocurrencies provide a hedge against this devaluation, offering individuals a way to protect their wealth.

High inflation rates in African central banks also contribute to the adoption of cryptocurrencies. While the inflation target for central banks in the US and Europe is around 2%, African central banks have higher target inflation rates, ranging from 3% to 8%. This higher inflation rate incentivizes individuals to seek alternative stores of value, such as cryptocurrencies, to preserve their purchasing power.

Valr.com’s Funding and Geographical Expansion Plans

Valr.com recently raised $50 million in funding from Coinbase Ventures, Pantera Capital, and other investors. With this funding, Valr.com plans to dedicate resources to specific geographies and product offerings. They have already launched perpetual futures, spot margin trading, staking products, and governance and security features.

Their ambition is to take their product offering global and compete with large global players. Valr.com aims to provide a seamless trading experience, allowing customers to trade spot, spot margin, and perpetual futures all from a single account with a single pool of collateral. They also emphasize the importance of integrity, distinguishing themselves from other platforms that may lack integrity.

Attitude of Institutional Investors towards Crypto in Africa

Contrary to the belief that institutional investors are rarely present in Africa’s crypto market, they actually account for the bulk of the trading volume. Institutional investors in Africa are not only active but also tremendously sophisticated. Valr.com’s largest volumes are executed by institutional traders using programmatic trading strategies.

This dispels the myth that only retail users are inclined to use crypto in Africa. Institutional investors play a significant role in driving the adoption and trading volume of cryptocurrencies in the region.

Proactive Regulation of Crypto Market by African Regulators

African regulators have been proactive in regulating the growing crypto market. They have made great strides in understanding the crypto industry and have put in place appropriate regulatory frameworks to protect the public and prevent illicit use of crypto.

South Africa has already started accepting license applications for Crypto Asset Service Providers (CASPs), and other jurisdictions such as Mauritius are doing the same. Valr.com has collaborated with regulators to inform responsible and appropriate regulatory frameworks, ensuring the interests of the public are safeguarded while allowing innovation to flourish.

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Partnership between Valr.com and Visa

Valr.com recently entered a strategic partnership with Visa to collaborate on payments solutions for their customer base. This partnership combines Valr.com’s crypto expertise with Visa’s extensive experience in payments. The details of the partnership will be announced in due course.

This partnership with Visa has the potential to benefit users by providing seamless payment solutions that bridge the gap between the traditional financial system and the crypto industry. It adds credibility and accessibility to the Valr.com platform.

Unique Insights Gained from Operating in Africa

As a South African exchange trying to expand globally, Valr.com has gained unique insights from operating in Africa. They have built a platform that is comparable to the best platforms in the world, with regular feedback from clients confirming its high quality. Despite being headquartered in South Africa, Valr.com has assembled a capable team from around the world.

Valr.com’s focus on advanced features for sophisticated traders, such as their world-class API, powerful governance and security features, and robust compliance framework, sets them apart from their peers in the West or Asia. They have created a platform that meets the needs of institutional customers while ensuring the integrity of customer assets and information.

In conclusion, African regulators now have a better grasp of cryptocurrency, understanding the significance of institutional traders in the market. Key factors driving crypto adoption in Africa include the slow traditional banking system, the need for a hedge against currency devaluation, and high inflation rates in African central banks. Valr.com’s funding and geographical expansion plans highlight their commitment to compete globally and provide a seamless trading experience. The attitude of institutional investors in Africa towards crypto dispels the myth that they are rarely present. African regulators are proactively regulating the crypto market, collaborating with platforms like Valr.com to ensure responsible frameworks. Valr.com’s partnership with Visa aims to provide enhanced payment solutions for users, combining expertise from both industries. The unique insights gained from operating in Africa have enabled Valr.com to build a platform that rivals global competitors, with a focus on advanced features and a robust compliance framework.

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