South Africa’s eZAR stablecoin has gone live, opening its network to the public and new partners after almost a year of pilot operations.
eZAR is a rand-backed stablecoin designed to maintain a value of R1, enabling instant, free transfers between wallets, while generating returns from reserves invested in a money market strategy.
The initiative, developed through a partnership involving asset manager Ninety One, AVBOB Financial Services and eZAR, allows financial institutions and other organisations to incorporate the digital currency into their own branded wallets.
eZAR Ltd is the authorised financial services provider responsible for the technology and main services underpinning the eZAR partnership.
Sean Emery, CEO of eZAR, says the project has spent the past year establishing its operating model before expanding its reach.
“We have been building and evolving eZAR for a year, with real money moving through real wallets every day. Getting it right came before getting it big, and eZAR is now ready to scale. The return is shared with the partners and the people who hold eZAR, not kept by us.”
The company says it has R303 million worth of eZAR tokens issued and held in circulation as at 30 October.
Shared returns
Each eZAR token can be transferred between participating wallets within seconds, at any time of the day. Transfers between wallets are free, according to the company.
The reserves backing the stablecoin are invested through a money market strategy managed by Ninety One, with allocations primarily to the Ninety One Money Market Fund.
Returns generated by the reserves are distributed daily to partners, after partnership fees. Each partner determines the terms on which its own customers receive the distributions.
The arrangement is intended to allow individuals and businesses to use the same payment infrastructure, regardless of the size of their transactions.
Adam Duxbury, head of digital assets at Ninety One, says the model combines digital payment infrastructure with an established investment approach.
“Money is moving from accounts to wallets, and South Africa should build its own version rather than import one. eZAR puts a rand that moves in seconds, at any hour, on top of a money market discipline we have run for 25 years. The rails are new. What sits behind them is not,” according to the firm.
Unlike a stablecoin operated by a single company, eZAR is structured as a partnership that allows participating organisations to integrate the token into their existing products and customer networks.
Potential partners include neobanks, retailers, insurers and payments companies. Each participant can offer a branded wallet, while operating on the shared infrastructure and participating in the partnership's economics.
“The use cases range from membership organisations collecting and making payments, to payment companies settling merchant transactions and exchanges handling tokenised asset settlements,” says eZAR.
AVBOB Financial Services, a subsidiary of AVBOB Mutual Assurance Society, is among the founding partners and acts as the lead institution and liquidity partner.
Killy Bacela, GM of business incubation and innovation at AVBOB Financial Services, says the organisation has been involved in testing the model within its existing client base.
“For a year, AVBOB Financial Services has been working with eZAR inside its own client base, exploring where digital cash that can grow fits with what we already offer. As a founding partner, we have helped build the infrastructure that others now join. Our work is already progressing beyond the initial implementation, with research and development underway to identify new features for our clients on the wider eZAR network.”
Bacela says the organisation's involvement was intended to help establish a network that other South African institutions could join.
Regulatory, investment risks
The technology behind eZAR draws on work undertaken through the South African Reserve Bank's Project Khokha 2, to which Block Markets Africa, eZAR's parent company, was a technical contributor.
However, eZAR cautions that it is a crypto asset issued by the eZAR En Commandite Partnership. It is not legal tender, a bank deposit, or a banking product, and is not guaranteed.
The R1 redemption value is subject to available liquidity, while money market returns can be positive or negative. Capital is also at risk.
Although the reserves are invested primarily in the Ninety One Money Market Fund, eZAR holders do not own units in the fund and have no direct claim on it.
The partnership says eZAR is available to the public through partner wallets and is inviting additional institutions to join its network.
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