Despite the huge appetite for digital assets in emerging markets, promoting their adoption and mainstream accessibility have been far from smooth sailing.
Last year, for example, Nigeria’s central bank banned banks and other financial institutions from facilitating cryptocurrency transactions and processing payments for crypto exchanges — a move that forced Binance and other crypto exchanges to halt deposits in the country.
And that is just one example. A recent report from Business Insider Africa shows that close to 30 countries across the region have implemented a ban on Bitcoin and cryptocurrency in an attempt to restrict its use.
But despite the extreme skepticism surrounding digital assets in emerging markets, Hannes Wessels, country head for Binance in South Africa, is of the view that regulators are gradually coming around.
He pointed to the recent circular from the South African Reserve Bank (SARB) encouraging collaboration between banks and crypto firms as an indication that local regulators are starting to recognize that the technology is less about money, and more about a broader exchange of value.
“[They are] realizing that the more open your economies are, the more freely you can exchange value between all spheres of society [and] the more your economy flourishes,” Wessels told PYMNTS in an interview.
Another reason behind this openness to digital assets, per Wessels, is that regulators increasingly view the technology’s transparency features as a boon for tracking — and cracking — financial crime.
“About 97% of the blockchain is completely transparent once you’ve got the wallet addresses [and] you can actually follow transaction trails going as far back as 10 years. [Regulators are beginning to see that] that’s very useful in the fight against financial crime,” he noted.
Increasing Mainstream Crypto Adoption
Data has shown that remittances is one of the most prevalent use cases for crypto across the African continent and a critical tool for the millions of migrant workers who need to regularly send money back to their families but can’t count on the slow and expensive traditional financial system to do so.
“[On] our platform, peer-to-peer payments are very cheap and fast. It takes 10 seconds to buy airtime from Ghana and send it to Vodacom in South Africa,” he remarked.
That level of interoperability is unmatched, Wessels added, and will unlock significant value for people in the region. Spreading that value across borders is a goal he said the cryptocurrency exchange is working towards as part of its mission to “avail this technology to the African continent.”
To that end, the firm recently announced that it has added a fiat gateway for the South African Rand (ZAR), a move that will enable local users to buy crypto and make instant and secure deposits into their Binance wallet, as well as convert ZAR into digital currencies such as BTC, BUSD, ETH, USDT and BNB.
Read more: Binance Offering One Month of Fee-Free ETH/BUSD Trading
And for the large groups of the population that have money in Rand and would like to buy crypto, the option to securely bridge their bank account to their Binance account couldn’t have come at a better time.
“Having that gateway from the traditional finance world to the crypto world is incredibly important for us,” Wessels said, who made clear that they view the two rails as parallel value streams that are not in competition with one another.
The Central Bank Digital Currency Angle
PYMNTS reported earlier this year that more than one hundred countries are considering and at various stages of exploring central bank digital currency (CBDCs).
Related: Central Banks May Take Additional Time to Explore CBDCs
SARB completed the second phase of its wholesale (CBDC) trials in April, a process which involved the country’s largest banks testing the viability of an interbank payments transfer and settlement system based on the central bank-backed digital currency.
Asked if CBDCs will be a gamechanger, Wessels said in a way the issuance of these digital assets is a recognition of the technology, and he ultimately sees a world where cryptocurrencies, coins and tokens operate in parallel with stablecoins and CBDCs.
Learn more: Emerging Markets See Stablecoins as Viable Alternative to Bitcoin
“There are many skeptics of crypto but there are not many skeptics of blockchain because it works and it’s been tested thoroughly,” he noted, adding that “the more CBDCs you have and the more liquidity you’ve got into these CBDCs, the more the entire ecosystem opens up and that’s good news for all of us.”
See also: Blockchain Technology Could Solve Many Challenges in Africa’s Payments Space
Overall, Wessels said that while the crypto industry is at about 7% to 8% global adoption globally, the 10% adoption rate in South Africa “is quite encouraging for an African country.”
What’s also encouraging is the significant adoption in other markets like Nigeria and Ghana as more and more people turned to crypto to hedge their savings and businesses against volatile local currencies.
“We see a lot of people getting access to a financial system that we’ve not previously seen and that’s one of the things we want to facilitate so we’re encouraged by that,” he added.
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