Crypto exchange Luno is charting a path to a better future, after reaching the 12 million customer milestone, despite navigating the instability presented by the “crypto winter”.
The South African-founded fintech firm, which went through retrenchments earlier this year, says it’s seeing a continuous increase in the number of South Africans who transact using crypto, with 250 000 weekly active users and around five million users based in SA.
Over the past year, the crypto market has gone through several turbulent cycles, with the crypto winter bringing about a jobs bloodbath across the globe.
Bitcoin and crypto-currencies crashed in 2022, following a cocktail of negative events, including market turmoil, the liquidation of some big crypto exchanges and a lack of regulation that eroded investors' confidence in crypto-currencies.
This saw Luno cull its staff complement by 35%. The news came less than a week after its competitor Crypto.com announced a second round of job cuts.
During a media round table with Luno executives yesterday, CEO James Lanigan said that after sailing through uncharted waters last year, 2023 is expected to become a watershed period, which will see the company − and the market as a whole – coming out of a bear market.
“We’ve just tipped over 12 million wallets on our platform, so we’re still seeing a lot of exciting growth. At the moment, we are a team of just under 650 people globally and what we’ve seen is that over the last year, it’s been a pretty bumpy ride, to say the least.
“I would definitely say the sentiment is turning a corner and I’m pretty confident we are kind of coming onto the other side, and I think the best proxy that one can always use is obviously the Bitcoin price and the general sentiment.
“Coming into 2023, the price was around $16 000 and at the moment it is around $30 000, so it’s more than double.”
Luno is a wholly-owned investment of DCG. The digital asset investor acquired Luno in 2020 post its Series B funding round and after first investing in the company’s seed round in 2014. It has a presence in 40 countries, with offices in seven regions.
Last June, Luno shut down its services in Singapore, a decision the company said it made after evaluating its global strategy.
According to Lanigan, market forces that currently have a positive effect on the market include the Bitcoin halving; the progression in the regulation of the market in SA and across the globe; growing market adoption; market sentiment; geopolitical events, such as the current US inflation rate and the Federal Reserve’s rate hikes to reduce inflation; and the stability in the tech sector’s employment landscape across the globe.
“When you look at the trends of the crypto history and observe the up and down cycles, like Bitcoin halving, which is happening next April, we’re seeing that the advancement with things like regulation in the industry and more players coming into the market, this creates a rising tide in the market.
“We’ve seen a huge boost in confidence, particularly last month, with more Bitcoin applications for exchange-traded funds (ETF) with the SEC [US Securities and Exchange Commission] for trading in the US, such as BlackRock, which has been called the 'BlackRock effect’.
“Asset manager Fidelity is also applying for a Bitcoin ETF, more banks are applying to offer digital asset custody services to institutional clients and Fidelity-backed exchange EDX is going live. All of these new stories are bringing a lot of more confidence into the industry just over the last few months.”
Lanigan is of the view that despite heightened US scrutiny of the sector, these recent developments are moving the digital-asset market in the right direction.
After cutting down its staff complement to 650, the company is still investing in further growth, with ambitions for a potential public listing in the future.
Marius Reitz, GM of Luno Africa, noted the company is planning to introduce additional crypto coins, and will upgrade its app, improve the web infrastructure and add new offerings.
“From the outset, we said that in order for us to optimise the existing financial system, in order for us to create financial infrastructure that’s more frictionless, we will need something completely new, something that’s not optimising the existing system, or just creating a better user experience, but probably something new, and in our view that’s studying decentralised crypto-currencies like Bitcoin.
“Because until today, the biggest obstacle on our road to increase adoption is lack of easy and safe access to crypto-currency. So, what we do is we make it easy for the public to convert their traditional fiat currencies into crypto-currencies. And that’s why we will be adding new features to the app.”