Nothing cryptic about the SA craze for cryptocurrency
Traffic on Luno’s platform ‘doubling every few months’
Cryptocurrency platform Luno, which has South African roots and is backed by Naspers, says it is still recording “exponential” growth in user numbers despite the recent selloff of bitcoin and other digital coins.
Following a spectacular rise through 2017, the price of flagship digital currency bitcoin fell from a high of R254,670 in December to R84,390 in early April, partly due to increased regulatory scrutiny. Bitcoin has since recovered slightly to R119,270, according to Luno’s prices.
The correction “hasn’t impacted activity on Luno – in fact it continues to drive new users who have read about digital currency thanks to increased press interest”, said Timothy Stranex, co-founder of the company that was launched in 2013 and was previously called BitX.
“We are now approaching two million customers globally and growth continues to be exponential,” Stranex said. Luno’s newest market, Europe, was its fastest growing.The London-headquartered company previously focused mainly on emerging markets. It now operates in 40 countries.
Traffic on the platform “is doubling every few months”, Stranex said, adding that Luno had partnered with cloud computing company Amazon Web Services to help it build scale and enter new markets.
But while Luno’s user numbers suggest increased investor interest, sales data from JSE-listed Mustek shows that demand for cryptocurrency mining equipment in SA has been dented by the recent selloff. After spiking earlier in the year, mining product sales were “under pressure” in March and April, Mustek CEO David Kan said.
South Africa is less conducive to cryptocurrency mining than places such as Tibet and Iceland, where electricity costs are cheaper and temperatures are lower.Meanwhile, Stranex said moves to regulate cryptocurrencies would be a long-term positive for the market. Luno was in talks with regulators on “appropriate frameworks”.
Regulators in the UK, Singapore and SA – the three markets where Luno has offices – have expressed cautious, but mostly accommodative, views on cryptocurrencies. The SA Reserve Bank’s new fintech unit has said it is reviewing the monetary authority’s position on privately issued cryptocurrencies. It will look at clearing and settlement risks, exchange control implications, cybersecurity considerations, and the implications for monetary policy and financial stability.