South Africa’s rand is gaining a new route into global digital asset markets, with ZAR Universal (ZARU), a rand-denominated stablecoin, going live on Circle’s Arc blockchain and launching as a founding currency pair on Circle StableFX.
ZARU is issued by BlockTower under a licence from the Financial Sector Conduct Authority.
The stablecoin is fully backed by South African rand held onshore, with each ZARU representing one rand. The reserves are managed by Sanlam Specialised Asset Management under an asset liability management agreement.
ZARU will trade against USDC through StableFX, Circle’s on-chain foreign exchange platform, with transactions settling on Arc.
The StableFX system uses a request-for-quote model and atomic settlement, meaning both sides of a trade settle simultaneously, or neither transaction is completed.
The launch is aimed at addressing some of the constraints faced by the rand in cross-border foreign exchange, including reliance on correspondent banking infrastructure and limited trading hours.
Luno will serve as the primary exchange venue for ZARU/USDC liquidity, providing trading infrastructure and access to its institutional client base. Institutional market makers are expected to add liquidity to the pair as the platform develops.
Last month, ZARU listed on Luno Global, in what it said was the first institutional-grade rand stablecoin on a regulated crypto exchange. The listing gives the rand an on-chain secondary market on Luno’s exchange.
“StableFX was built to bring institutional FX on-chain – with atomic settlement, RFQ execution and real liquidity from day one,” says Nikhil Chandhok, chief product and technology officer at Circle.
“We welcome ZARU as the first African stablecoin on the platform, bringing local regulatory oversight and the high standards of the Circle Partner Stablecoins programme to institutional markets.”
“With ZARU live on Arc Mainnet, the rand now has global institutional reach – backed one-to-one by reserves held onshore in South Africa. Programmable money supported by institutional market makers on-chain, the infrastructure is now in place,” says Vighnesh Patel, CEO of BlockTower.
James Lanigan, CEO of Luno, notes that regulatory compliance would be important to the stablecoin’s institutional use.
“Globally compliant liquidity is the foundation of any serious institutional digital asset strategy,” says Lanigan.
“ZARU gives institutions a ZAR-denominated settlement that meets the regulatory bar, connected to a global network they already trust. Local compliance, global reach – that’s exactly what we’ve been building towards.”
ZARU is being developed through a partnership involving Luno, Sanlam, EasyEquities, Lesaka and BlockTower.
Luno provides the exchange infrastructure, while Sanlam provides the reserve backing. EasyEquities will provide access to ZARU for retail investors, while Lesaka is expected to explore its use in merchant and point-of-sale payments. BlockTower is the issuer.
Standard Bank and Absa are among the banking partners supporting the ZAR Universal Network, with the network expected to expand to additional financial institutions and banks.
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