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

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

Farzam Ehsani, the founder and CEO of the South African crypto exchange Valr, has stated that institutional traders account for the bulk of the African continent’s crypto trading volumes. To support this point, Ehsani referred to Valr’s largest volumes which he said “are executed via our API by institutional traders deploying a host of programmatic trading strategies.”

African Regulators Now Have a Better Grasp of Cryptocurrency

While retail traders do account for some of Africa’s traded volumes, Ehsani said that believing the trading activity of large investors on the continent is insignificant is a myth that needs to be dispelled.

Meanwhile, when asked about the state of crypto regulation on the continent, the CEO claimed that some of Africa’s financial sector regulators have indeed “made great strides in recent years to better understand the crypto industry.” Understanding how players in the space operate has in turn helped them “to put in place regulations to appropriately regulate the industry.”

In written answers sent to News via Telegram, Farzam Ehsani identified South Africa and Mauritius as two countries which have gone as far as asking crypto entities to submit license applications. Ehsani also touched on how Valr’s partnership with the likes of Visa and Circle helps the crypto exchange move forward. Below are the CEO’s answers to all the questions sent. News (BCN): What are the key factors driving crypto adoption in South Africa and other African nations? And what makes the African market different from the rest of the world?

Farzam Ehsani (FE): In Africa, money in the traditional banking system is generally slow and expensive to move, particularly across borders. Additionally, central banks across Africa, like the rest of the world, are mandated to devalue their own currency, and over a long enough time horizon, Bitcoin and crypto provide a hedge against this currency devaluation.

While the Fed and the ECB target a 2% inflation rate, the target inflation rate of African central banks is much higher at 3-8% (with Ghana and Zambia at the higher end of this range). Make no mistake though, the seemingly innocuous term “inflation targeting” plainly means that it is the stated objective of central banks to devalue the currency of its citizens and more and more people are waking up to the fact that Bitcoin and crypto provide an alternative to this economic model.

BCN: recently raised $50 million in funding from Coinbase Ventures, Pantera Capital, and other investors. With this much funding what geographies and product offerings do you plan to dedicate resources to and why?

FE: Valr has just launched perpetual futures, including the world’s first BTC and USDT perpetuals paired against the South African Rand (ZAR). This follows our launch of spot margin trading, staking products and a host of governance and security features to serve our large institutional customers as well as the average retail user.

Having become the largest exchange in Africa in recent years, our ambition is now to take our product offering global and to compete with the large global players. We believe our product suite provides the most seamless trading experience out there, allowing our customers to trade spot, spot margin and perpetual futures all from a single account, utilizing a single pool of collateral.

Lastly, integrity matters. And this has been lacking from many of the large global players. We’re excited to bring to the world a phenomenal product with the integrity that the global crypto community deserves.

BCN: In Africa, it’s mostly the retail users that are inclined to use crypto. Institutions are rarely in focus. Can you describe the attitude of institutional investors in the region towards crypto?

FE: While it’s true that retail crypto users are very active in Africa, it’s a myth that needs to be dispelled that institutional investors and traders are hardly present across the continent. In fact, the bulk of the crypto trading volume is done by institutional traders on the continent and these traders are tremendously sophisticated. Valr’s largest volumes are executed via our API by institutional traders deploying a host of programmatic trading strategies.

BCN: In your opinion, are regulators across the continent being proactive in regulating the growing crypto market? Is working with the respective authorities to inform regulatory frameworks that protect the public and prevent the illicit use of crypto?

FE: Regulators across the African continent have made great strides in recent years to better understand the crypto industry and to put in place regulations to appropriately regulate the industry. South Africa started accepting applications for the licensing of Crypto Asset Service Providers (CASPs) in June this year and jurisdictions such as Mauritius are doing the same. Valr has worked with many of these regulators to inform responsible and appropriate regulatory frameworks to ensure that the interests of the public are safeguarded while allowing innovation to flourish.

BCN: Your platform recently announced a partnership with the global payments giant Visa, which is already working closely with crypto asset service providers like Coinbase and Circle. Can you talk about the nature of your partnership with Visa and how it could benefit the users?

FE: Valr entered a strategic partnership with Visa recently to collaborate on payments solutions for our customer base. This partnership will leverage VALR’s deep crypto expertise with Visa’s vast payments experience. We’ll be able to announce more details in due course.

BCN: More often than not it is the Western or Asian crypto platforms that go global and dominate more than one geography. As a South African exchange trying to expand globally, what unique insights have you gained from operating in Africa that your peers in the West or Asia might lack?

FE: Valr has built a platform that is on par with the best platforms in the world. We get regular feedback from our clients that our API and platform is as good as, and often better than, what they experience with the largest crypto exchanges out there. While we’re headquartered in South Africa, we’ve assembled a tremendously capable team from across the world.

Given that a large proportion of our trading volume comes from institutional customers, we’ve built some of the most advanced features for sophisticated traders including a world-class API, powerful governance and security features–including shared accounts and subaccounts–all while ensuring a robust compliance framework to safeguard the integrity of customer assets and information.

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