New rand stablecoin market opens into a potential regulatory wall
BlockTower, the issuer of the rand-backed stablecoin ZARU, said on Thursday that Luno has listed ZARU/USDT and ZARU/USDC trading pairs on its exchange,…
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BlockTower, the issuer of the rand-backed stablecoin ZARU, said on Thursday that Luno has listed ZARU/USDT and ZARU/USDC trading pairs on its exchange, putting the rand on a continuous order book against the world’s two largest dollar stablecoins. Three days earlier, national treasury and the South African Reserve Bank published a draft manual that would bar South African companies from moving crypto across the border at all.
BlockTower’s pitch is aimed squarely at the constituency those rules would exclude. The company says “treasuries and trading desks” can now “move size in and out of ZARU at attractive spreads, around the clock”, and that the new pairs amount to “rand FX moving on-chain”. Under the draft Crypto Assets Manual for cross-border activities, published on 3 August, only natural persons may transact offshore in crypto, using the R2-million single discretionary allowance or the R10-million foreign capital allowance. Resident entities “may not enter into crypto asset transactions deemed as import or export of capital”.
If the draft is adopted as written, South African corporate treasuries would be the one group unable to use the international leg of the market ZARU has just opened.
The pairs are open to Luno customers in South Africa, Nigeria, Kenya and Uganda, with more markets to follow “as regulation permits”. Currency Hub, a licensed financial services provider and crypto asset service provider, will quote two-way prices as market maker.
The parties on both sides of the listing are the same parties. BlockTower has three shareholders. Two of them are Luno, the exchange doing the listing, and Sanlam, whose asset management arm runs ZARU’s reserves. The third has not been named. BlockTower CEO Vighnesh Patel came from Luno, where he was an independent member of its digital asset listing committee – the body that decides which tokens the exchange lists – and resigned that seat on taking the job.
In other words, an exchange part-owns the issuer whose token it has just listed; the issuer’s reserve manager is also its shareholder; and the issuer’s chief executive came off the exchange’s listings committee. None of that is unlawful, and all of it is disclosed in pieces. Assembled, it describes a market in a rand currency substitute in which a small number of institutions occupy most of the seats.
Read: VALR hits back at proposed cross-border crypto ban
BlockTower declined to comment on the draft rules or to compare ZARU with rival rand stablecoins. Its shareholder was less reticent. Marius Reitz, Luno’s GM for Africa and Europe, said the manual “effectively prohibits companies from making cross-border payments with cryptocurrencies”, cutting South African firms off from stablecoin use “for any form of cross-border commercial transactions, supply chain payments or international trade”.
“Stablecoins enable instant low-cost cross-border business-to-business payments and are one of the biggest use cases for cryptocurrencies, in a g…