New SA crypto platform begins worldwide trading
South African-based crypto-currency platform VALR.com began worldwide trading today, and to drive adoption, trading in crypto will be free of charge for the month of March.
CEO and co-founder Farzam Ehsani, who used to be blockchain lead at RMB, tells ITWeb that he believes VALR has the fastest know-your-customer (KYC) process in the industry, and it does not need human intervention.
When financial institutions onboard a new customer, they are obliged to carry out a KYC process to verify their identity.
When signing up to the VALR platform, a prospective client will need to scan and upload their driver's licence, ID or passport. Algorithms then check the document to make sure it has not been tampered with.
It will then, depending on the age of the user's cellphone, request a selfie or video of the applicant, in a so-called 'liveness test'.
Algorithms then compare a frame of the video to the ID document, and if it judges they match, the applicant is verified and able to trade on the platform.
Ehsani says the system failed on "rare occasions", such as when an ID picture was old (in a couple of cases, over 35-years-old). In these cases, the applicant must be manually processed.
"Other than that, our KYC is completely automated. And that's the reason it's the fastest in the industry - there are no humans involved."
Through VALR's partner Bittrex, a US-based blockchain platform, clients can buy and sell over 50 crypto-currencies. On Luno, another crypto-currency platform, only Bitcoin and Ether can be bought or sold. Bittrex led a $1.5 million seed round in VALR.
Ehsani says VALR will introduce crypto to rand exchange in the near future. Fees are charged at 0.75% of the buy or sell transaction, while crypto and rand deposits are free. Crypto withdrawals vary between networks, and rand withdrawals are charged at R8.50.
"Our strategy is to let the market decide what cryptos are worth, and the way to do that is to allow people to express their views on crypto, and they need to have the opportunity to express their views."
He says VALR already has clients in the 'low thousands', all of whom joined before the launch.
Asked to comment about the price of crypto-currencies, Ehsani says it may well have been low over the last few years, but is 'sky-high' compared to three or four years ago.
"Every store of value never became a store of value just like that," he says, clicking his fingers.
"The market needs to decide. A store of value is a social, psychological concept. As long as people don't want crypto, and think it's a fringe thing, it will remain volatile, but there are more and more people coming to the market."
He uses the example of gold, and its early volatility, as an example. "It takes a social norm to find that equilibrium. We're still finding it.
"The reason we built VALR is because we believe the world needs a financial system that recognises the oneness of humanity, and our current system doesn't do that. It's confined to national borders. Crypto transcends national borders. We're very excited about that, because we believe we're all world citizens."