Featured Crypto Destination: Cape Town, South Africa
The imposing Table Mountain defines the silhouette of Cape Town, which is tucked away at the southernmost point of Africa. The “Mother City,” which is the second most populous city in South Africa, is frequently mentioned as one of the best places to go on vacation because it provides a mix of beaches, nature, history, culture, and entertainment.
The city is situated at a location that has immense geographic significance because ships that circle Africa’s tip shift their course from south to east or vice versa here. The Dutch East India Company founded Cape Colony here in 1652, the first European settlement in modern-day South Africa, to supply Dutch ships bound for East Africa, India, and the Far East.
South Africa’s legislative capital is Cape Town. It is the oldest city in the nation and home to the South African Parliament. It is the biggest city in the Western Cape and the second largest in the nation, behind Johannesburg. The city is included in the metropolitan municipality of the City of Cape Town.
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The earliest known remnants of human occupation in the region were found at Peers Cave in Fish Hoek and have been dated to between 15,000 and 12,000 years old.
One of the most racially integrated cities in South Africa was Cape Town until the middle of the 20th century. Swearing “swart gevaar,” which is Afrikaans for “black danger,” the National Party won the 1948 national elections on a platform of apartheid (racial segregation). The multiracial franchise in the Cape was eventually undermined and abolished as a result of this.
A small secessionist movement has been growing in Cape Town and the Western Cape province since the 2010s. In the municipal elections of 2021, support for parties “which have formally adopted Cape independence” was approximately 5%.
The cryptocurrency culture of Cape Town
Cape Town is recognized as a leading cryptocurrency center in Africa, hosting several annual conferences. Notable events include Adopting Bitcoin in January and Crypto Fest Cryptopia in November. Additionally, the inaugural ETH CapeTown hackathon was held in 2019.
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Johannesburg, or “Joburg,” as the residents call it, is frequently contrasted and compared with the seaside city. In Johannesburg, “people have a commercial desire versus a desire to create mutually beneficial relationships, which is more characteristic of Cape Town.”
In the city, crypto gatherings for cryptocurrency are “very informal in nature, with business events often turning into social ones,” says Greg van der Spuy, CEO and co-founder of Dark Fusion Technology, a company that develops smart contracts. There is a rooftop barbecue area for parties at the company’s penthouse office.
He notes that “there are still untrusted actors,” but he contends that relationships develop organically here, in contrast to places like California, where he claims people typically only extend their networks when they stand to gain something directly from them.
Cape Town’s cryptocurrency businesses and projects
Crypto businesses have sprung up all over the city, covering a broad range of use cases from competitive blockchain infrastructure firms to localized energy-sharing.
Regarding DeFi, NeoNomad runs a number of apps on Solana and created ZarCoin, a stablecoin based on the South African Rand that it claims is fully supported and complies with regional laws. There are alternative stablecoins for South Africans to use Web3 without succumbing to USD hegemony, such as ZARP. Block Markets Africa and RainFin provide design, listing, and legal structuring services to help bring tokens into compliance for individuals wishing to start a project.
Dedicated to selling NFT trading cards featuring photographs of threatened or endangered species, Wildcards.world has already raised over $200,000 for environmental causes. In what it claims to be some of the sunniest locations on Earth, The Sun Exchange installs solar panels and pays investors with cryptocurrency returns from the sale of electricity. FoodPrint provides supply chain management services, particularly for small farmers, using blockchain tracking systems.
Regarding podcasts, Crypto Banter is well-known worldwide and adds a uniquely South African perspective to the global crypto discourse.
The industry is growing more and more reputable. This week, the Financial Sector Conduct Authority of South Africa granted 59 crypto businesses operating licenses; 262 more license applications are still pending.
The crypto finance infrastructure of Cape Town
Three of the largest cryptocurrency exchanges in the city are OVEX, Luno, and Circle-backed VALR. According to van der Spuy, there are frequently large arbitrage opportunities between South African exchanges and comparable exchanges abroad, with cryptocurrency rate differences ranging from “0.5%–3.6% at any given point.” He points out that the day before our interview, the price of Bitcoin on South African exchanges was 2.5% higher than on international exchanges of a similar caliber.
“Very strict regulatory controls” surrounding foreign money transfers, which were implemented “to prevent capital flight out of the Rand system,” are the cause of this. Nevertheless, he claims that as more competitors have entered the market, liquidity has improved.
Not everyone in this nation of African immigrants has easy access to traditional banking. Van der Spuy illustrates how non-citizens who are sending money home to their home countries rely on gray-market money-transfer services, which can cost up to 30% in fees — a significant reduction from the already meager $100 monthly remittance — using examples from his own circle. Though it is frequently difficult to find an off-ramp, like an exchange at the money’s destination, cryptocurrencies, in particular stablecoins, are starting to offer an alternative.
As a non-South African citizen, van der Spuy claims that opening a bank account is extremely difficult.
Where to spend crypto
Many local businesses now take cryptocurrency; the majority of them started doing so in the last year.
One noteworthy example is Pick-n-Pay, where over 2,000 locations enable BTC payments via partner CryptoQR for the purchase of groceries, airtime, and even utility bills.
Coffee flavors from all around the continent are available at Cape Coffee Beans.
A number of nationwide e-commerce businesses, such as RunwaySale Takealot.com, The Team Merchant, and Custom Candies, also take cryptocurrency. Another importer of Ikea products on the list is Nevada Furniture.
Cryptocurrency debates in Cape Town
Cape Town, like many other cities with a significant crypto community, has seen its fair share of hackers and scammers. The city was the scene of one of the largest Bitcoin scams, according to a 2021 report by Chainalysis, when Mirror Trading International (MTI) raised $588 million from almost half a million wallets before collapsing, promising depositors 0.5% in daily returns.
Numerous clients in Cape Town were entangled in the Africrypt controversy of 2021. Users of the Johannesburg exchange, which is owned by brothers Ameer and Raees Cajee, allegedly received notices about missing money asking them not to report it to the police. The brothers reportedly vanished after taking $3.6 billion in cryptocurrency, according to media reports.
In contrast to Dubai or Switzerland’s Crypto Valley, visitors dealing with cryptocurrency in this region are recommended to be discreet with valuable items and secure wallets, due to significant wealth gaps leading to increased crime rates. The prevalence of electric fences and razor wire around residential properties is a testament to the need for heightened security measures. Therefore, exercising caution, particularly regarding gadgets capable of accessing cryptocurrency, is essential.
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