In 2023, South Africa faced a series of setbacks in the cryptocurrency space, raising concerns about its position in the global market. One notable incident was when a banking partner for Kraken, a major US-based crypto exchange, ceased accepting deposits from South Africans, citing money laundering risks associated with the country. This was a direct consequence of South Africa’s greylisting by the Financial Action Task Force (FATF) in February 2023, which flagged concerns over the nation’s compliance with global standards on money laundering and terrorism financing.
This decision followed earlier moves by Circle, the issuer of USDC stablecoin, which also halted deposits from South Africa. While some exchanges like Kraken still provide alternative deposit methods through services like Etana, the cumulative impact of these developments has raised alarms in the country’s crypto landscape.
Ripple Effect of FATF Greylisting
The FATF greylisting has created real consequences for South African crypto investors, who previously enjoyed seamless transfers to international exchanges. With stricter regulations on the horizon and increased scrutiny from global entities, many are concerned that South Africa might become isolated from the wider crypto market.
This isn’t the only blow to the country’s crypto enthusiasts. The collapse of major crypto exchange FTX in late 2022 and the subsequent downfall of crypto-linked banks such as Silvergate and Signature have left local trading firms in a difficult position, particularly those involved in crypto arbitrage.
OVEX’s Resilience Amid Turbulence
Despite the disruptions, OVEX, a leading South African crypto brokerage, has remained fully operational. According to its CEO, Jon Ovadia, OVEX anticipated these market changes and bolstered its offshore infrastructure to maintain uninterrupted services. The company has managed to navigate the turmoil with a robust vetting process for its counterparts, ensuring clients’ funds remain secure.
OVEX boasts a $50 million balance sheet and processes $500 million (R9.3 billion) in monthly trading volume, providing liquidity and stability for traders in South Africa. The company’s over-the-counter (OTC) desk, which allows large-volume transactions at a single competitive price, has positioned it as a critical player in the local market.
Navigating Regulation
With regulation looming in the South African crypto space, companies like OVEX are preparing for a more regulated future. OVEX already holds a Category 1 licence from the Financial Sector Conduct Authority (FSCA) and is authorized by the South African Reserve Bank (SARB) to facilitate international payments. It also operates in Dubai and Australia, with plans for further international expansion.
While South Africa may be facing challenges in the crypto space, resilient players like OVEX are finding ways to adapt and thrive despite regulatory and market pressures. Whether the country will overcome these hurdles and re-establish its position in the global crypto market remains to be seen.
