South Africa’s newest crypto-currency exchange VALR today launched rand-Bitcoin trading on its platform. Customers can now buy and sell Bitcoin directly with rands, and also use Bitcoin and Ether to buy and sell over 50 other crypto-currencies.
A little over an hour after VALR started rand-Bitcoin trading, CEO Farzam Ehsani said it had already seen millions of rand worth of trades.
He attributed this to the platform having the lowest fees on the market, and that, for the first time, there was now international pricing of crypto-currencies for the South African market.
The plan is to also launch rand-Ether trading in future.
Ehsani told ITWeb that when VALR launched on December 6, 2018, it was very close to the bottom of the price of Bitcoin. Since then, the price has recovered somewhat, to just under $8 000.
The platform is backed by United States-based exchange Bittrex and former FNB CEO Michael Jordaan. Aside from Ehsani, there are another three partners, who also contributed to the startup costs.
Ehsani said he has a long-term view of crypto-currencies, and that it’s important to look past the day-to-day price movements.
“The price will go up and down based on the whims of people, but if you understand the technology and the impact this asset class can have on the world, you take a different perspective.”
He said VALR was seeing a ‘ridiculous’ amount of sign-ups at the moment, and that someone new was joining the platform every few minutes. Its customers now number in the thousands, and while they are accepting customers from all over the world, the majority are South Africans.
It doesn’t accept customers from North Korea, or from the United States, due to the latter’s `particularly burdensome regulatory environment’.
He’s particularly proud of VALR’s onboarding system, which he says is the fastest in the world.
At the moment, exchanges in South Africa are not required to verify the identity of clients, a requirement known as KYC, or ‘know your customer’.
Ehsani says, however, they’ve spent a significant amount of their R20 million startup money to build a system that automates the sign-on process.
Prospective clients are asked for their name, surname, address and a password. They then upload an image of their ID, driver’s licence, or passport, which is then analysed to see if it’s a legitimate document.
VALR now needs to tie these pieces of information together with a ‘liveness’ test, and the app will ask you to film a short video of yourself, following instructions, such as looking to the right and left, and repeating a string of numerals.
It then compares frames of the video to the ID document, and if this matches, you’re cleared to trade. All this happens in about five minutes, and a staff member will only get involved if the system flags a discrepancy.
Exchange controls: Relic from the past
Bittrex is providing the liquidity for crypto-to-crypto trading.
In South Africa, there are exchange controls for on-shore and off-shore assets. An individual is allowed to move R1 million a year, subject to a valid SARS tax clearance certificate. No one is allowed, however, to buy crypto with rands, which, Ehsani says, is ‘very, very limiting, and why we need some liquidity to grease our operations’.
VALR thus facilitates trade between its customers and those from Bittrex.
Ehsani is a vocal opponent of exchange controls, and says it’s stifling the South African economy.
“It’s a relic from the past. It may have had a purpose during the apartheid regime, but we’ve grown beyond that now.”