What Future Has the Crypto and Forex Markets in South Africa

Africa has an estimated 1.3 million traders with South Africa being the market leader in the continent in daily forex trading volume. With over 1000 registered financial institutions under the market conduct regulator FSCA, the South African forex market is well regulated. Forex trading is becoming more popular both as a primary and secondary source of income. These traders are looking for good South African brokers to trade forex when entering the market.

Cryptocurrency trading is also getting popular, particularly bitcoin (BTC), which is now the most prevalent digital currency among thousands of others. To trade financial markets safely, you must choose a trustworthy broker who values fair trading conditions and fast payouts. There is a plethora of brokers that accept clients from South Africa. 

This article explores the future of the crypto and forex markets in South Africa. We will consider the regulatory framework, market trends, causes of the growth of the market and future speculation.

Regulation of Crypto and Forex Trading in South Africa

In recent years, South Africa's regulatory framework for the cryptocurrency sector has evolved. The South African Reserve Bank (SARB) issued a consultation document on crypto asset policy recommendations in 2019. The study recognised the benefits of crypto assets, such as enhanced financial inclusion and improved payment systems, but also emphasized the risks associated with these assets, such as money laundering and fraud. In May 2021, the Financial Sector Conduct Authority (FSCA) issued a warning to South African investors about the hazards of investing in crypto assets. The FSCA cautioned investors that the crypto sector is unregulated and that they should take caution when investing in these assets.

The FSCA is in charge of overseeing and regulating currency trading in South Africa. FSCA registration is necessary for all brokers seeking to provide brokerage services in South Africa. Regardless of where they are located, everyone may legally create an account with any Forex broker. FSCA has done a lot to enhance the South African financial scene by actively monitoring the sector and educating investors. This has increased local investor confidence and demand.

Forex and Crypto Market 

The daily forex trading volume in South Africa was approximately $19.1 billion USD in 2017. The South African Rand (ZAR) is also one of the top 20 most traded currencies in the world, with a yearly trading volume of over $70 billion in 2016. The South African forex market’s daily trading turnover averages about $20 billion.

South Africa's Forex Trading demand for all currency pairs, including USDZAR, is on the rise month to month. Consequently, the deposit volume on forex brokers is on the rise as traders increase their purchasing power.

The South African crypto market has also grown significantly in recent years. The number of wallets on crypto exchanges owned by South Africans is consequently on the rise. These investors are both trading and holding their crypto assets while waiting for price appreciation. The survey also discovered that Bitcoin, Ethereum, and Litecoin are the most popular cryptocurrencies in South Africa, with Bitcoin being the most extensively adopted. According to the survey, cryptocurrencies are being adopted in South Africa due to a number of variables, including a high level of financial exclusion, political and economic instability, and a big informal sector.

Future of Crypto and Forex in South Africa

Cryptocurrencies are enticing to investors from all walks of life. They can help improve financial inclusion in South Africa by providing a simple onboarding process. People can simply create an account with a crypto broker and purchase some crypto for themselves. The technology is also cross-border, encouraging more people to onboard.

Additionally, cryptocurrencies present the opportunity to trade and earn profits. This is yet another reason there is a surge in the creation of online wallets on broker sites. This trend is expected to grow as the benefits attract new people. Moreover, South Africans are regarded as easy to accept new technologies. This could make penetration even faster.

Further, the forex market is already popular among South Africans. It is both a primary and secondary source of income. Some new traders are entering the market with the intention of making trading a full-time job. Others Simply use trading forex as a secondary source of income. These use cases will continue to attract new accounts to broker sites. Thus, the forex market in South Africa is also expected to grow.

Causes of the growth of forex and crypto trading.

The most beginner-friendly trading market is one in which brokers are eager to provide a fair trading environment for traders of all kinds. While there are a lot of respected brokers online, there is a plethora of scam operations in the market. Hence, there is a need for regulation to protect investors from shady operations at all costs.

Tightening restrictions in the retail Forex arena in Europe, as well as severe leverage caps, have caused brokers to go overseas to minimize operational costs and expand their markets. As a result, Asia and Africa have become more appealing destinations, with SA serving as the new African base for many regulated European brokers. This brings new investors into the market with brokers having promotional sales to attract new traders.

The Financial Sector Conduct Authority (FSCA), SA's independent regulator, and the country's strong banking links with global economies are the primary reasons why forex brokers are establishing operations in SA. In addition, increased access to the Internet and improved telecommunications across the continent attracted a large number of new forex traders who signed up to trade on existing electronic trading platforms. This shows that the crypto and forex markets in South Africa will continue to grow as more people learn about them.

Final thoughts 

As we have seen in this review, both the forex and crypto markets are already popular in South Africa. South Africans are some of the most active players in online financial markets. With regulations tightening, the confidence of investors is expected to go up, hence attracting more money and players into the market. 

The crypto market’s popularity is still blazing hot with investors educating themselves and entering this market. These markets will simply continue to grow as new money enters the market.