Discovery Bank’s Thursday announcement of a deal with cryptocurrency platform Luno, which will allow the former’s customers to trade cryptocurrencies online, is yet another sign that cryptocurrencies are becoming mainstream in South Africa.
The move follows another deal announced in October between Scan to Pay and MoneyBadger that allows users of major cryptocurrency exchanges – including Binance, Luno, Blink and VALR – to pay merchants at over 650 000 stores nationwide using bitcoin, stablecoins and other digital assets without having to first convert them into rand.
“We are seeing a momentous shift in cryptocurrency adoption locally and globally, but the catalyst for change in South Africa was regulation. We went through a period where the traditional banks de-risked from crypto and that all predates crypto regulation and the regulatory space we are in currently,” said Christo de Wit, Luno country manager for South Africa, in an interview with TechCentral on Thursday.
“The banks in South Africa are also realising that this is an asset class that has established itself very well and there is demand for its since one in 10 South Africans hold cryptocurrency.”
Cryptocurrencies are gaining traction for both investment and payment, but this was not always the case. De Wit referred to a period when South Africa’s banks de-risked themselves from crypto assets, leading to market-wide caution. This was most pronounced in 2019 and 2020. The move was driven by a lack of clear regulation around crypto assets, leading banks to associate the asset class with high levels of risk.
Changing the regulatory perspective on crypto in South Africa has taken a long time. As far back as 2014, national treasury, the South African Reserve Bank, the Financial Services Board, the South African Revenue Service and the Financial Intelligence Centre issued a joint statement alerting the public to the risks associated with transacting or investing in crypto assets. The Reserve Bank followed this warning up with a position paper highlighting crypto-associated risks such as money laundering, lack of a legal framework and the circumvention of exchange control regulations.
Positive turn
The first positive turn came in 2016 when South Africa’s financial regulators came together to form the Intergovernmental Fintech Working Group (IFWG) with the aim of developing a common understanding of fintech developments, including cryptocurrencies. Two years later, the Crypto Assets Regulatory Working Group was established; its goal was to formulate a coherent policy position on crypto assets in South Africa.
It was only in 2021 that a position paper on crypto assets and a policy road map were drafted. A year later, in October 2022, crypto assets were declared a financial product under South African law, laying the regulatory foundation enabling institutional investors to view the asset class in a more serious light.
According to Discovery Bank CEO Hylton Kallner, advances in the regulatory space have changed the banking sector’s perspective on crypto assets, especially from a risk management point of view.
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“The environment is becoming more broadly regulated and the regulation has become clear, so there isn’t any uncertainty around the platforms and the asset class itself. The second thing is that we can see that our clients are investing and trading in crypto assets extensively,” Kallner said in an interview with TechCentral.
Kallner said the choice to partner with Luno was driven by a desire to give the bank’s customers more choice in terms of the number of crypto assets they can trade and how they do that.
“For us, what is important is connecting our clients to partners who, on a fully integrated basis, make it simple and seamless for them to transact in the ways that they want to. Luno has excellent liquidity with over R400-million traded per day on the platform and over 50 crypto assets available,” said Kallner.
He said Discovery Bank clients will be able to trade cryptocurrencies within their banking apps but features related to crypto payments already available on Luno’s platform will not be available to the bank’s clients. The reason for this, Kallner explained, is that crypto payments infrastructure and the associated regulatory frameworks are yet to mature in the way that crypto investments have in South Africa.
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“Crypto payments are a very different category. The use case and the payment rails are not as well developed in the case of crypto, whereas crypto as an investment class is becoming more well established,” said Kallner. – © 2025 NewsCentral Media
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