With just two months left in this year, many investors have been waiting for the premium to bounce back to levels seen in the first half of the year. This isn’t happening any time soon, so it’s time to trade out your remaining tax clearance certificates and hope for a global reset in the coming months.
Crypto arbitrage is where you buy crypto on an overseas exchange and sell it back in South Africa for a higher price (a premium), due to exchange control. Currency Hub has been doing this without a single loss since 2017, but a lot has changed over the past six months.
Since June, the gross premium has been down 50% relative to the first half of the year. It’s now averaging 0.9% (January to June averaged 1.8%). While Currency Hub believes this is circumstantial and unlikely permanent – yet very few arbitragers can exploit this opportunity under these depressed market conditions.
Currency Hub, on the other hand, continues to trade most days, ensuring you can use your full R10-million allowance and any remaining tax clearance certificates, delivering consistent profits with zero losses (since inception in 2017).
The causes of the premium drying up is US dollar strength, rand weakness, high inflation and rising interest rates causing equities, bonds and cryptocurrencies to continue selling off. For as long as the rand is R18/$, there remains uncertainty around global macro conditions, and while bitcoin is trending below $20 000, this will continue to impact all markets and dry up liquidity to perform the arbitrage trade at a higher premium.
“Given the state of global markets, this is still the best investment for a few hours of work. Even under these conditions, we are netting our clients around 20% in two to three months, equal to around R50 000 per person per year using a full tax allowance.” – David Farelo, head of operations and trading, Currency Hub
Thousands of South Africans have benefited from crypto arbitrage, yet many remain doubtful about this unique investment strategy – its authenticity and financial rewards with relatively low risk. Yet a regulated Financial Sector Conduct Authority-regulated company like Currency Hub with a Reserve Bank-approved forex intermediary licence has matured to become the longest-serving and the most regulated arbitrage provider, having never incurred a loss from over 30 000 trades since 2017. This is pure arbitrage, leveraging two financial services licences that are unique to Currency Hub’s actively traded arbitrage strategy.
While the premium may have dropped from 10% to around 1% over five years (as one would expect from arbitrage), it’s not all doom and gloom, especially if you are sitting on a pile of tax clearance certificates waiting for the premium to open up. However, you need to consider the reality that this may be the new norm for the next three to six months, so rather trade and make something than let all your hard work and FIA allowance go to waste.
Currency Hub can assist with all FIA applications, with a track record of generating 10+ approvals each month.
For the past three months, Currency Hub has been trading intermittently and will use them as a proxy for the next three to six months, but we will now trade the lower premium more actively. As such, Currency Hub has cut its forex fee by 50% for the remainder of the year to ensure clients get the highest premium in this current market and this all remains worth their while. Currency Hub has set the FX rate aet 0.25% for the rest of the year. This is the only fee, and the arbitrage itself is still done for free (no performance fees).
With only two months left of the year, Currency Hub is encouraging its clients to trade out their allowances and any remaining Sars Pins before 1 January when the cycle resets for the new year. There are still excellent returns available from the arbitrage – way better than cash and equities. Consider that R250 000 sitting in the bank for three months will earn you only around R3 700 versus what that cash could do instead (likely accessible from your bond).
Example of Currency Hub client profits in a lower-premium market (trading with the recommended R250 000)
| Gross premium | R1m SDA client profits | R10m FIA client profits | Total client profits |
| 0.70% | R2 500 | R25 000 | R27 500 |
| 0.80% | R3 500 | R35 000 | R38 500 |
| 0.90% | R4 500 | R45 000 | R49 500 |
| 1.00% | R5 500 | R55 000 | R60 500 |
What does Currency Hub do differently from other providers in the space, to ensure that clients get consistent returns in an environment where the premium is not as high as it was a few years ago?
There are two elements in Currency Hub’s arbitrage business, which ensure it provides the best service to its clients:
- Currency Hub is the forex intermediary provider, so it facilitates all its clients’ forex payments to buy the cryptocurrency offshore in-house. This means they’re not paying a third-party forex provider to do this for you. Most of the competition can only trade two days a week as a result of outsourcing this crucial function.
- Currency Hub hedges its clients’ trades and makes use of institutional credit lines. This is critical because it means that they can buy and sell the cryptocurrency simultaneously and clearly see the available profits before committing to the trade, hence consistent returns with zero losses since 2017 … pure arbitrage.
Please refer to Currency Hub ‘s website at www.currencyhub.co.za. We have account managers and FIA specialists that will contact you, or you can register right on our website and we’ll take it from there.
Disclaimer: Currency Hub is an authorised financial service provider (FSP 50850) and SARB-approved foreign exchange intermediary (6176). For the circumstances of “unregulated cryptocurrencies”, Currency Hub provides a forex intermediary service, with zero financial advice, within the framework of the FSCA, SARB and the Currency and Exchanges Act.
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