From cointelegraph by Victoria Li

“When people look at Africa, they tend to lump it all together into one entity, which really diminishes the complexity and color that exists on the continent. But there are over 50 countries with many currencies, borders, cultures, tribes, and languages,“ noted Farzam Ehsani, CEO and co-founder of VALR, during Cointelegraph’s recent X Spaces.

His colleague, VALR’s Head of Growth Blake Player, agreed: “Africa is definitely not like Europe or the US with one big homogeneous trading environment. There are different markets with very different rules, regulations and levels of sophistication.“

Ehsani, Player and VALR’s chief marketing officer Ben Caselin, gathered for a live discussion to discuss the nuances of the African crypto scene and strategies for crypto exchanges to thrive in these circumstances.

“No choice“ for Africa but crypto

Speakers noted the specificities of the African financial landscape, such as the phenomenon of mobile money, depreciating currencies, high interest rates and high remittance volumes. “Remittances are very expensive, highly intermediated and there’s a severe lack of liquidity for most African local currencies,“ added Player.

Cryptocurrencies and stablecoins appear to offer a potential solution. “Crypto holds a lot of promise as a hedge to store value in this context for those who can actually hold it for the long term, while stablecoins offer a way to preserve value and transfer it more cheaply and quickly across the continent and internationally. We can actually see this demand for stablecoins on VALR,“ said Ehsani.

He also noted the historical challenges with property rights and identity in Africa: “We’ve had a lot of challenges proving that somebody is associated with a particular address or a particular piece of land that they own that they can use as collateral to borrow money. And that really is a huge drag on an economy. Whereas with crypto, they can literally have a mobile phone and an internet connection and then have access to a wallet. I think that will be transformative for the continent. It already has been.“

Large institutions also appear to be getting into the crypto game, as Ehsani explained: “It’s happening slowly, but we’re starting to see banks, asset managers and larger financial institutions understanding that this is a very powerful space. Previously, they tried to stay out of crypto because blockchain promised to reduce costs for their client base and they benefited from the higher fees. But in the last few years, they’ve realized that they don’t really have a choice anymore, especially with the rise of ETFs in the US. Large financial institutions and central banks in Africa have yet to fully embrace crypto, but that time is coming relatively soon.“

Value-driven business

VALR is building on the growing interest in crypto from African institutional investors. In addition to its one million retail users, it serves the needs of over a thousand corporate and institutional clients, primarily small and medium enterprises, who use the platform’s liquidity and infrastructure.

“We are the largest crypto exchange in Africa by trading volume and also, I believe, the only global exchange from Africa that offers spot trading, spot margin, perpetual futures, staking and a whole range of other products and services,“ said Ehsani. Headquartered in Johannesburg, VALR is licensed in South Africa and has approval to offer crypto services in the European Union, with approvals in Dubai and the Cayman Islands forthcoming.

The founder’s journey began in 2016 as the blockchain lead at FirstRand Bank, the largest bank in Africa by assets. “We saw that there was a pretty big gap in the South African market at the time, with a dominant exchange that only had one asset, Bitcoin. And their fees were around 1%,“ recalls Ehsani. “So we thought, let’s build a platform that has more reasonable fees and more assets. And that’s what we did.“

Another thing that sets VALR apart is its approach to financial services. “We think about financial services in terms of five pillars: storage of value, transfer of value, exchange of value, provision of value or lending, and protection of value. We trade value and we really believe that the crypto space needs to take a step up in terms of its ethics,“ said Ehsani.

“A lot of the value that we add in Africa at the moment is providing the bridge between the traditional financial markets and the financial services and products that you can access. There’s really a big difference between the financial products you can access if you live in the UK or the US, for example, and even a place like South Africa, which has a fairly sophisticated financial sector. But in countries like Uganda, there are very few quality financial products that are available to retail people or non-high-net-worth individuals. Part of what crypto and VALR enable is to bring people into a global financial space where financial opportunities are largely democratically distributed,“ Player added.

This vision extends to the trading contests that VALR runs on its platform. “It’s about sharing value and attracting top traders to the platform,“ noted Caselin. Ehsani added: “We have just launched our trading arena, which focuses on ROI and PnL. We want traders to come and experience our products and services and participate in our shared value as we create value.“

VALR’s commitment to shared value extends to its fee structure. “We have actually pumped a lot of our fees and revenues back into the pockets of our traders,“ Ehsani said. This includes negative maker fees on spot books, where liquidity providers are paid when their orders are filled.

The speakers also highlighted other features. “One of the things I’m most excited about is what we’ve done with our API and sub-account features that allow other fintech companies and institutions to actually build different products and services on top of our infrastructure and use our liquidity, custody, sub-accounts, deposits, patrols, on-ramps and off-ramps,“ said Player. “We’re starting to see products and services that we hadn’t thought of or that are very different from ours.“

Unlocking Africa’s potential

“I think Africa is immensely powerful in its potential,“ says Caselin. “And the technologies we’re developing now are just there to unlock that. The role of a financial system is to free energy and potential.“

“We’re really optimistic about the future of the financial system, and that cryptography can enable a new version of it to make things cheaper and faster, to send value over the internet as seamlessly as sending an email,“ added Ehsani.

“In the future, things like savings products and investment products will be accessible through crypto rails, as well as borrowing and lending, as is already happening in the mobile money space. I think crypto will start to expand to places that don’t have developed mobile money networks,“ concluded Player.

They also shared plans for the company’s future development. VALR is exploring various avenues to expand its offerings, including lending, derivatives and RWA. Expanding multichain support and exploring new layer 1 networks such as TON are also key priorities. “We are also looking at developing VALR Pay, making it even more useful and expanding the list of external networks that accept VALR Pay,“ said