How VALR plans to steal a march in a busy SA crypto space

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The cryptocurrency space in South Africa is hotting up, with a host of local startups raising funding. But the Johannesburg-based cryptocurrency exchange VALR feels it has an edge.

Disrupt Africa reported recently on the rise of South Africa as a crypto hub, with the likes of DCX, OVEX, Coindirect, Revix and Centbee – the majority of them also exchanges – raising funding in the last few months alone.

Founded last May and launched to the public in December, VALR announced its own funding round – worth US$1.5 million and featuring Michael Jordaan’s Montegray Capital and global blockchain platform Bittrex – in March. But co-founder and chief executive officer (CEO) Farzam Ehsani believes the startup, which helps customers buy, sell, store and transfer cryptocurrencies, has certain advantages over its competitors.

One of these is in the breadth of options available on VALR.

“We support over 50 cryptocurrencies on our platform, making us the platform with the largest selection of cryptocurrencies in South Africa and the continent at large. Currently customers can trade their bitcoin or ether for over 50 other cryptocurrencies in the simplest way. In a month or two we will be enabling South African rand on our platform so that customers can buy and sell cryptocurrencies with their rands,” Ehsani told Disrupt Africa.

Whereas previously South Africans needed to buy bitcoin or ether on one of the local South African exchanges and then send it to overseas exchanges to access a broader range of cryptocurrencies that exist, VALR brings this large range of cryptocurrencies directly to the South African public without the hassle of needing to “exchange jump”.

“VALR is also bringing the simplest buying experience to our customers at much more competitive rates than the market currently offers. For our market-makers – those that bring liquidity to VALR – we actually have negative fees,” Ehsani said.

“This means that we pay our customers 0.1 per cent of the value of their trades for the liquidity they bring to our platform. This is a first for South Africa, Africa and most of the world. We’re very excited to be offering this to our customers and have already received a very positive response.”

Positive indeed. Within 10 hours of going live, VALR had averaged one sign-up per minute, and it welcomed its thousandth customer shortly thereafter. Ehsani said the response in general had been “great”.

“We have been particularly pleased with the market’s response to our referral programme where customers can earn up to ZAR1,500 (US$100) for each referral they make to VALR through commissions they receive and they also get 15 per cent off their trading fees once they have referred one friend to VALR,” he said.

VALR, which makes money from trading fees, is positioning itself as a global platform, accepting customers from 160 countries worldwide, but faces challenges for customers at home and abroad. Backers like Jordaan and Bittrex will help, but Ehsani is under no illusions as to what lies ahead.

“Building a cryptocurrency exchange is a complex affair. From the technical build, to ensuring industry-leading security, to navigating and anticipating regulatory frameworks to marketing to attract a wide customer base that is needed for any company that requires network effects,” he said.  

“Any startup is really in the business of problem solving, and that’s exactly what we’ve been able to become good at.”

Others will fancy their chances too, in what is an increasingly busy space. Yet all the signs are VALR has what it takes to last the distance.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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