Blockchain is emerging as a crime-fighting tool
Despite the huge appetite for digital assets in emerging markets, promoting their adoption and mainstream availability has been far from smooth.
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’s just one example. A recent one report from Business Insider Africa shows that close to 30 countries across the region have implemented a ban on Bitcoin and cryptocurrency in an effort to limit its use.
But despite the extreme skepticism surrounding digital assets in emerging markets, Hannes Wessels, country manager of Binance in South Africa, is of the opinion that regulators are gradually coming.
He pointed to the latter circular from the South African Reserve Bank (SARB) encouraging cooperation between banks and crypto firms as an indication that local regulators are beginning to realize that the technology is less about money and more about a broader exchange of value.
“[They are] realize that the more open your economies are, the more freely you can exchange value between all spheres of society [and] the more your economy is booming,” Wessels told PYMNTS in an interview.
Another reason behind this openness to digital assets, according to Wessels, is that regulators increasingly see the technology’s transparency features as a boon for tracking — and cracking — financial crime.
“About 97% of the blockchain is completely transparent once you get the wallet addresses [and] you can actually follow transaction traces going back as far as 10 years. [Regulators are beginning to see that] it is very useful in the fight against financial crime,” he noted.
Increasing mainstream crypto adoption
Data has shown that remittances are one of the most widespread use cases for crypto across the African continent and a critical tool for the millions of migrant workers who regularly need to send money back to their families but cannot rely on the slow and expensive traditional . the financial system to do so.
“[On] our platform is peer-to-peer payments very cheap and fast. It takes 10 seconds to buy airtime from Ghana and send it to Vodacom in South Africa,” he noted.
This level of interoperability is unmatched, Wessels added, and will unlock significant value for people in the region. Spreading this value across borders is a goal he said the cryptocurrency exchange is working toward as part of its mission to “access 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 to their Binance wallet, as well as convert ZAR into digital currencies such as BTC, BUSD, ETH, USDT and BNB.
Read more: Binance offers one month of fee-free ETH/BUSD trading
And for the large groups of the population who have money in Rand and want to buy crypto, the ability to link their bank account to their Binance account could not have come at a better time.
“Having that gateway from the traditional financial world to the crypto world is incredibly important to us,” said Wessels, who made it clear that they see the two rails as parallel value streams that don’t compete with each other.
The central bank’s digital currency angle
PYMNTS reported earlier this year that more than a hundred countries are considering and are in various stages of exploring central bank digital currency (CBDC).
Related: Central banks may take extra time to explore CBDCs
The SARB completed the second phase of its wholesale trials (CBDC) in April, a process that saw the country’s largest banks test the viability of an interbank payment transfer and settlement system based on central bank-backed digital currency.
When asked if CBDCs will be a game changer, Wessels said in a sense that the issuance of these digital assets is a recognition of the technology and he eventually sees a world where cryptocurrencies, coins and tokens operate in parallel with stablecoins and CBDCs.
Learn more: Emerging markets are seeing Stablecoins as a viable alternative to Bitcoin
“There are many skeptics of crypto, but there are not many skeptics of blockchain because it works and it has been thoroughly tested,” he noted, adding that “the more CBDCs you have and the more liquidity you have in those The CBDCs, the more the whole ecosystem opens up, and that’s good news for all of us.”
See also: Blockchain technology can solve many challenges in Africa’s payments space
Overall, Wessels said that while the crypto industry is at around 7% to 8% global adoption globally, the 10% adoption rate in South Africa is “quite encouraging for an African country.”
Also encouraging is the significant adoption in other markets such as Nigeria and Ghana, as more and more people turned to crypto to hedge their savings and businesses against volatile local currencies.
“We’re seeing a lot of people getting access to a financial system that we haven’t seen before, and that’s one of the things we want to facilitate, so we’re encouraged by that,” he added.
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