South Africa Embraces Cryptocurrencies Amidst Global Financial Instability

In an era marked by financial uncertainties worldwide, cryptocurrencies seem to have weathered their storm amidst criticism and scepticism. Even as former FTX CEO Sam Bankman-Fried stands trial in New York, charged with one of the largest frauds in financial history, cryptocurrencies like Bitcoin and Ether have surged in value. Bitcoin, for instance, has grown by 100% year to date, currently trading at over $35,000.

These surprising developments have mainly been attributed to U.S financial authorities warming up to the idea of allowing crypto exchange-traded funds (ETFs) and their recognition that cryptocurrencies should not be classified as securities. Decisions like these have opened up new possibilities for public trust in the crypto industry and has resulted in big names like Deutsche Bank applying to the U.S Securities and Exchange Commission (SEC) to become digital asset custodians. Even asset management giant, BlackRock, has applied for a Bitcoin ETF license.

Back home in South Africa, the scenario seems equally promising. James Lanigan, the CEO of Luno, South Africa's leading crypto trading platform, has observed positive and progressive movements in response to these overseas changes, despite what he perceives to be "unhelpful regulatory developments" in the U.S.

He noted that in South Africa, "crypto asset providers have applied for licences from the FSCA [Financial Sector Conduct Authority] following the classification of crypto assets as financial products", clearly indicating growing trust in this novel form of currency. Lanigan also asserted that crypto trading turnover has remained stable nationwide, with crypto owners retaining their assets longer than the global average.

While acknowledging that the primary utility of cryptocurrency is still investment, Lanigan pointed out that many South Africans are now using cryptocurrencies as a buffer against political instability, currency instability, and inflation, making it an attractive store of value.

He concluded that while crypto transactions are still taking baby steps, it's essential to remember that the crypto industry is still in its early years. He posits that as adoption rates increase, the industry will stabilize, paving the way for an appreciation in the value of cryptocurrency coins.