The integration of cryptocurrencies into South Africa’s financial ecosystem is rapidly accelerating, marked by a significant new partnership: Discovery Bank has announced a deal with crypto platform Luno to allow its customers to trade digital assets directly online.
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This move is the latest indication that crypto is officially becoming mainstream in the country. It follows a separate deal struck in October between Scan to Pay and MoneyBadger, enabling users of major exchanges—including Luno, Binance, Blink, and VALR—to pay merchants at over 650,000 stores nationwide using Bitcoin, stablecoins, and other digital assets without first converting them to Rand.
The shift towards institutional acceptance in South Africa is largely being driven by regulatory advancements, according to Christo de Wit, Luno Country Manager for South Africa.
De Wit noted that local banks previously went through a period of “de-risking” from crypto—most pronounced in 2019 and 2020—due to the lack of clear regulation. This caused banks to view crypto assets with high levels of risk.
Today, that perspective has fundamentally changed. Banks are recognizing crypto as an established asset class with significant local demand, noting that approximately one in 10 South Africans currently hold cryptocurrency.
The formal inclusion of crypto into South Africa’s financial framework has been a long process:
- Early Warnings (2014): National Treasury, the SARB, SARS, and other regulators issued a joint statement cautioning the public about risks like money laundering and the circumvention of exchange controls.
- IFWG Formation (2016): Financial regulators formed the Intergovernmental Fintech Working Group (IFWG) to build a common understanding of crypto and fintech developments.
- Policy Formulation (2018): The Crypto Assets Regulatory Working Group was established to develop a cohesive policy position.
- The Turning Point (2022): After years of preparation, crypto assets were officially declared a financial product under South African law in October 2022.
For Discovery Bank, the decision to partner with Luno was dual-pronged, driven by both reduced regulatory risk and strong customer demand.
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According to CEO Hylton Kallner, the clearer regulatory environment has drastically improved the banking sector’s risk management view of crypto platforms and the asset class itself. Furthermore, the bank observed its clients were “investing and trading in crypto assets extensively.”
The Luno Partnership Details
- Integration: Discovery Bank clients will be able to trade cryptocurrencies within their banking apps, offering a simple and seamless experience.
- Liquidity and Choice: Kallner highlighted Luno’s robust liquidity, with over R400 million traded per day, and its offering of over 50 crypto assets, giving customers ample choice.
- Focus on Investment: The partnership currently focuses solely on crypto investment and trading. Crypto payment features already available on Luno’s platform will not be extended to Discovery Bank clients. Kallner explained this is because the regulatory frameworks and infrastructure for crypto payments are not yet as well-developed in South Africa as they are for crypto as an investment class.
This collaboration signals the banking industry’s acceptance of digital assets as a legitimate investment avenue, facilitated by years of deliberate regulatory efforts.
