Due to currency volatility and infrastructure issues, the use of virtual currencies in emerging markets has boomed in recent years. In 2020, Nigeria was ranked third globally in terms of countries with the highest bitcoin trading volumes \u2014 generating transactions worth more than $400 million \u2014 behind the United States and Russia.<\/p>\n
In the private sector, firms like South Africa-based cryptocurrency exchange Luno<\/a> have grown significantly as the usage of digital currencies has increased.<\/p>\n The firm, which has over 9 million customers worldwide, views the African region as one of its strongest markets. Luno also claims that over 45% of the 1 million new customers added to the platform since June 2021 were based in Africa, while its customer base in the region grew almost 50% in 2020 alone to hit 4.7 million.<\/p>\n To capitalize on this growth and the abundance of new firms emerging in the sector, the company recently launched Luno Expeditions<\/a>, an investment arm focused on early-stage FinTech and crypto startups to accelerate the development of a new financial ecosystem.<\/p>\n In an interview with PYMNTS, Jocelyn Cheng<\/a>, CEO at Luno Expeditions, said the reason for the launch is tied to the unprecedented early-stage investment opportunities they\u2019ve noticed in emerging markets like Africa.<\/p>\n Cheng said Africa\u2019s unique combination of demographics \u2014 particularly its young, tech-savvy population \u2014 and economic trends makes it \u201cone of the most promising regions for the adoption of a new financial system.\u201d<\/p>\n Read more: <\/strong>African Crypto Exchange Luno Explores Push into US<\/a><\/p>\n She said the firm\u2019s long term hypothesis is that digital currencies are going to revolutionize the financial system, which is why investing in \u201cquality startups\u201d in developing regions that share the same goal of building a better financial system is key.<\/p>\n \u201cWe don\u2019t actually see very many global, early-stage FinTech investors with a specific focus on Africa and East Africa. We see an exciting opportunity here to build a fund that reflects the very global nature of FinTech,\u201d she added.<\/p>\n Cheng went on to say that while the U.S. crypto space is more focused on investments, speculation, trading and derivatives products, the utility of crypto in regions like Africa is much more related to improving everyday lives in areas like payments, remittances and greater financial inclusion \u2014 offering a \u201cmass market opportunity\u201d they are looking to leverage through their investments.<\/p>\n Remittance Use Case<\/strong><\/p>\n Sending money abroad has become an essential part of everyday life, with customers sending billions annually to people in low- and middle-income countries.<\/p>\n As the remittance market evolves, consumers are increasingly seeking faster, cheaper and seamless alternatives to send money abroad, with some turning to digital currencies as a viable method for transferring funds.<\/p>\n Read the report: <\/strong>The Digital Currency Shift: The Cross-Border Remittances Report<\/a><\/p>\n Data from a PYMNTS cross-border remittances report shows that while 13% of consumers surveyed said cryptocurrencies were their most used payment method for online cross-border remittances, nearly a quarter (23%) of consumers who made online cross-border peer-to-peer (P2P) payments sent funds using at least one kind of cryptocurrency.<\/p>\n Cheng acknowledged that remittance is a key use case especially in emerging markets, but she argued that people do not choose a remittance provider solely based on the fact that their service is built on blockchain technology.<\/p>\n Read more: <\/strong>Crypto Emerging as a Favored Form for Cross-Border Remittances<\/a><\/p>\n Instead, users focus on a service that has no hidden fees, an optimized user experience and high security support in their language of choice.<\/p>\n \u201cIf that is all enabled by being on blockchain, wonderful, but no one will pick a remittance product for that reason alone,\u201d Cheng said.<\/p>\n While there are definitely opportunities for crypto to help improve the user experience for remittance products, Luno\u2019s investments will mainly depend on how much consumers embrace the product and the level of traction and community activation it has.<\/p>\n \u201cWe\u2019re not trying to invest in companies just because they\u2019re crypto,\u201d she added. \u201cWe want to invest in companies in which crypto makes sense, and I think [remittance] is a great use case for crypto, but that\u2019s not the sole reason why we invest in companies.\u201d<\/p>\n As an example of a non-crypto remittance firm with high-growth potential, Cheng referenced one of their portfolio companies, Tanzania-based cross-border payments company NALA, which recently raised $10 million seed to build a \u201cRevolut-style\u201d brand for the African market.<\/p>\n Moving forward, Cheng said Luno\u2019s ambition is to scale up investments to 200-300 per year, given the abundant early-stage opportunities they see: \u201cWe came up with that [range] because we wanted to reflect the size of the opportunity [out there].\u201d<\/p>\n \u00a0<\/p>\n Sign up <\/em>here<\/em><\/a> for daily updates on all of PYMNTS\u2019 Europe, Middle East and Africa (EMEA) coverage.<\/em><\/p>\n
![\"\"](\"https:\/\/securecdn.pymnts.com\/wp-content\/uploads\/2018\/11\/PYMNTS-March-2022-Study.jpg\")