A NUMBER of emerging economies across Africa have the potential to become digital asset hubs. Simultaneously, the cost of compliance for crypto exchanges is increasing as regulatory clarity emerges, according to Ben Caselin, chief marketing officer of VALR, a crypto exchange based in Johannesburg, South Africa.
“South Africa is the entryway to the rest of Africa with a good rule of law and independent judiciary. It’s easy to open a company in South Africa,” Caselin told Cointelegraph in an exclusive interview.
Caselin views several emerging economies in the African subcontinent as promising hubs for digital asset adoption.
In April, South Africa’s Financial Sector Conduct Authority (FSCA) granted new crypto asset service provider (CASP) licenses to VALR. The exchange, which raised $55 million in equity funding from Pantera Capital, Coinbase Ventures and others, has obtained Category I and II CASP licenses from the FSCA.
Revenue in the South African cryptocurrency market is expected to touch $246 million in 2024 and show a compound annual growth rate of 7.86% to reach $332.9 million by 2028, according to a Statista report.
On March 12, South Africa’s Financial Sector Conduct Authority (FSCA) approved 59 cryptocurrency platform licenses under existing law. At that point, 262 applications were still being processed from a total of 355 applicants.
South Africa is the first African nation to license crypto exchanges. In 2021, it explored a separate regulatory framework for crypto, with plans still in place by 2022 as it aimed for final regulations that year.
Caselin said that after years of consultation and working closely with the regulator and other local market players, the FSCA has only recently established its regulatory regime for Crypto Asset Service Providers, requiring on-site visits to ensure compliance.
Over the next few years, Caselin expects this regime to further mature. Eventually, getting more clarity around capital controls and crypto assets is important, Caselin said, adding that he expects “more clarity around definitions”. Elaborating, he said.
Regulation has also affected compliance costs, which have “increased manifold” for VALR. Caselin said that over the past few months, VALR has increased its headcount “significantly,” with more than 10% of its total workforce in compliance.
