Intensifying crypto regulation may increase compliance costs for crypto-asset service providers (CASPs), but it is highly unlikely to eliminate the cost advantage of cryptocurrency-based financial products — and that resilience comes down to the structural efficiencies of crypto, say leading voices in South Africa’s industry.
According to Luno’s country manager for South Africa (Christo de Wit) and VALR co-founder and CEO (Farzam Ehsani), crypto-based services remain structurally more efficient than traditional-finance equivalents even under regulatory pressure.
“Blockchains and crypto assets represent a paradigm shift in how finance works,” said Ehsani.
“Crypto services such as payments are a fraction of the cost of their traditional-finance counterparts and will be increasingly adopted by the world as time goes on.”
Even with added compliance overhead, Ehsani said crypto-asset services deliver a “step-change” in the efficiency of financial services – particularly in terms of speed and cost when it comes to global payments.
De Wit echoed the sentiment, emphasizing that crypto products are “structurally designed” to outperform traditional finance.
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Self-Custody: a Core Differentiator
Beyond cost and speed, crypto has another major advantage: the ability for individuals and institutions to self-custody their digital assets. Ehsani emphasized this as a key divergence from traditional finance.
“With crypto assets, everyone has the option to self-custody, eliminating the need to trust intermediaries,” he said, noting this is “not possible in traditional finance, where every asset … must by definition be held by a trusted intermediary.”
He added that while intermediaries such as VALR will continue to provide services to those who prefer them, the mere existence of self-custody alters fundamentally how people hold and control value.
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Regulation – Including the Travel Rule – Likely Won’t Kill Self-Custody
Asked whether evolving regulation – meant to comply with global requirements on anti-money laundering (AML) and counter-terrorism financing (CTF) – might eliminate the self-custody option, De Wit acknowledged that “friction” is already increasing, pointing out that South Africa implemented its version of the Travel Rule from 30 April 2025. Under that rule, financial institutions involved in virtual-asset transactions must provide originator and beneficiary information with each transaction.
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That regulatory burden, he argued, doesn’t necessarily force users back onto traditional finance rails. Instead, the added procedures are “necessary friction … to adhere to global AML/CTF processes and protect consumers.”
He said crypto’s structural efficiencies hold firm even under compliance overhead, and that blockchain – with appropriate reporting – remains more efficient than legacy systems like cross-border transfers via SWIFT.
A Coming Fusion — Where Banking and Crypto Converge
Looking ahead, Ehsani predicted a future where the line between traditional banking and crypto services fades: blockchain infrastructure will be integrated into financial institutions, and crypto offerings will become ubiquitous.
He noted that VALR has already signed agreements with a major African money-transfer business – Mukuru (which serves over 17 million customers) – as well as two of South Africa’s largest banks, with more partnerships expected.
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That, he argued, signals that “there won’t be any financial institution without a crypto offering in the next few years,” and that VALR is positioning itself as the infrastructure provider powering those offerings.
Meanwhile, the fact that Discovery Bank recently announced a first-of-its-kind partnership with Luno – integrating crypto services directly into its mobile banking app – reinforces the idea that crypto and traditional finance are already beginning to merge.
Ehsani compared this to banks’ initial scepticism toward the internet: just as most banks eventually embraced online services, he believes the same will happen with crypto.
“It’s just a matter of time before traditional finance and crypto finance merge to become the future of finance.”
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