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It seems the banks are getting behind stablecoins in a big way….Stablecoins are transacted on the blockchain with near-instant settlement, very low costs and an ability to move funds anywhere in the world 24/7, even outside traditional banking hours.
It makes sense that the banks would be exploring this new technology.
Recognising which way the market was trending, Absa made a conscious decision about three years ago to enter the digital asset space, and the first step in that journey was providing safe and secure custody of digital assets – something already embedded in its DNA, given the billions it custodies for clients in the digital fiat space.
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In November last year, New York-listed Super Group, owner of the gambling platform Betway, launched a rand-pegged stablecoin called ZAR Supercoin, with Absa responsible for custody of the reserves backing this new coin. This move caught the attention of the banking arena.
This is a natural role for a bank, says Rob Downes, head of digital assets at Absa CIB. Absa provides a reserve account for the custody of the assets underpinning the stablecoin, but this is just the start.
Read:
NYSE-listed Super Group issues first bank-backed ZAR stablecoin
Stablecoins are gaining ground as digital currency in Africa
Also last year, Absa inked a collaboration deal with crypto infrastructure company Ripple, the major backer of cryptocurrency XRP, which is used as a bridge currency to help facilitate cross-border payments and foreign exchange transactions.
We now have multiple rand-pegged stablecoins, and it looks like Absa is piloting one of its own, called Absacoin for the moment.
Downes says Absa set up a digital asset team three-and-a-half years ago and what we have seen so far is just a foretaste of things to come.
“We were really looking at how stablecoins could help cross-border payments. And this led us to building our own stablecoin on a private permission blockchain. We actually didn’t back that with rand – we backed ours with gold. And we’ll see how that plays out as we start testing it with clients,” he says.
“Our intention is that we start running some tests later this year on our stablecoin. I think it’s very clear that stablecoins are being used for cross-border payments every day.
“But one of the things we’re really keen to explore as part of our testing is how we ensure that through using stablecoins, we’re still able to provide the Reserve Bank with balance of payment reporting, with financial surveillance reporting, just to see if this is something that will help obviously with the broader rollout of regulations and give the regulators some insights into how it could work.”
It’s clear that there will be many more ZAR stablecoins in the future.
All this points to an interesting and new direction for banking – bearing in mind the banks’ historic dismissal of crypto. Discovery Bank [for instance] now lets you buy crypto [via its] app. Behind the scenes, the banks are gearing up for big things.
Listen/read:
Are the banks warming to crypto?
New rand-backed stablecoin launched
Although not directly related to stablecoins, Absa is also working on an initiative with SWIFT, the global messaging system used by banks around the world for international payments.
“SWIFT is looking at using a blockchain solution to enable cross-border payments,” Downes explains, “and about 39 banks are participating in that globally. That’s something else we’re quite keen to pursue to see if SWIFT really has a role to play there and how the banks can work together to bring some of that into the African market too.”
Listen/read: What if South Africa’s access to SWIFT is threatened?
Downes highlights why stablecoins have such a rich future in Africa. “They came from nowhere six years ago to a market cap north of $240 billion today, as the use cases became evident – from traders looking to settle cross-border invoices to people looking to hedge against weak local currencies. One of the biggest use cases in Africa is remittances.”
In Nigeria alone, more than $92 billion was transacted in stablecoins and cryptos in 2024, showing how this new technology is reshaping commerce across the continent.
It is a market that many believe will explode to more than $2 trillion globally by 2030. As Downes explains, this is not a market you can afford to ignore.
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