VALR’s Rise, Vision and Future in Crypto: Insights from VALR CEO Farzam Ehsani

This post is an adaptation of an interview originally published on The Digital Commonwealth.

Describe what it took for VALR to become the largest exchange in South Africa and Africa as a whole, recently culminating in the FSCA, South Africa’s regulator, granting VALR a dual CASP license? 

South Africa was a logical first choice from which to launch VALR. Both my co-founders and myself had lived and worked in South Africa and were well acquainted with the economy, the institutions, the financial infrastructure and the opportunities in the region.

From the outset, we sought to build productive relationships at all levels in society. We’ve always put customers first and have shared value with our user base as the exchange has grown. VALR maintains great relationships with some of the largest banks in the region. This has enabled us to provide the best fiat on- and off-ramps in our home country. Additionally, VALR has always been proactive and transparent with all the regulatory bodies in South Africa, including the Financial Services Conduct Authority (FSCA), South Africa’s regulator overseeing crypto asset service providers.

In 2022, VALR raised the largest ever crypto funding round in Africa of USD 50 million from highly regarded venture capitalists including Pantera Capital, Coinbase Ventures, and Avon Ventures, the venture arm affiliated with Fidelity, one of the largest asset managers in the world

VALR has now become the largest exchange in South Africa and Africa as a whole by trade volume. We serve more than 600,000 traders globally, and more than 1,000 corporate and institutional clients across Africa, Asia Pacific and Europe. In April 2024 we were amongst the first to receive a license from the FSCA and VALR is now regulated as a crypto asset service provider (CASP) in South Africa. This has not only strengthened our position in Africa, where we are seeing accelerated growth, but it has also opened up new avenues for expansion globally. 

‍Can you provide more insight into how your background and world views shape your leadership and VALR as a business? 

I was born in the United States and grew up in Kenya, as my parents left their homeland in Iran following the persecution of the Baha’is there which continues to this day.

As a Baha’i, from an early age I was taught about the fundamental oneness of humanity and that service is worship. My mother didn’t care what profession I chose, so long as I was of “service to humanity” as she would always say. Given the injustices my parents and family went through in Iran, the promotion of justice and serving my brothers and sisters around the world is at the core of what inspires my actions in life.  

We live in a world that is overrun with injustice. The financial system is no exception. At VALR we are trying to help build a financial system that recognises the oneness of the human race and to help advance the cause of justice that such a recognition brings.  

I think human beings were created noble and through empowerment, encouragement and an aspiration for excellence we can reach heights we did not know were possible. And on top of this, if one has a unified team, there is little that can get in the way of progress. Such is my aim and hope for VALR, that we remain a united team, aspiring for excellence in our ambition to be of service. 

‍In crypto, emerging markets are rarely associated with the institutional investment community, but the bulk of VALR’s trading volume reportedly comes from corporates, institutions and professional traders. Can you describe the financial landscape in Africa, what crypto adoption looks like and what the opportunities are for crypto firms interested in Africa? 

Much has been written about how crypto gives everyday people in developing countries a means to hedge against hyperinflation and challenging macroeconomic conditions. This is the principal reason why emerging economies rank so highly in global adoption indices.

However, the picture is much more nuanced than that. There are many professional traders based in emerging markets, and while their assets under management may not be as large as some of the largest players in the world, they are no less sophisticated. We have a large number of traders that are accessing VALR through our world-class application programming interface (API), deploying a wide range of trading strategies.  

VALR has one of the best APIs in the world, and our emphasis on serving sophisticated clients with dedicated security and trading features for this segment has attracted a large number of professional traders to VALR from around the world.  

Traditional financial institutions - including asset managers, banks and financial advisors - in emerging markets are also working on ways to integrate crypto into their offerings. While I’m not at liberty to share specific names, VALR is working with some of the largest household names in the financial industry to help them bring crypto asset products to their millions of customers in emerging markets. Furthermore, corporations of all sizes have started to include crypto assets as part of their treasury management strategies.

Institutional adoption in the crypto space is happening all over the world. It’s obvious when you see news of the US spot Bitcoin ETF approvals, but it’s happening all over the world in a myriad ways.  

‍Globally, a handful of crypto exchanges dominate the scene, and hundreds of exchanges vie for attention. What is behind VALR’s success, what gives the exchange its edge, and what initiatives are in place to grow beyond Africa? 

At the core of everything that VALR does is an ethos of service to our customers and the human race. We also have a strong belief in shared value.  This means that as we do well, so do our customers. As an example, we were one of the first spot crypto exchanges in the world, if not the first, to offer our customers negative maker fees. This means that we paid our customers to provide liquidity on our platform, and we still do.  

We’ve also just launched a futures trading competition with the largest prize pool of its kind in crypto history — up to $60 million over the course of a year. This is based on the same premise of shared value. As our revenues increase from our newly launched perpetual futures, the pool size increases for our traders.

We’ve also built our product to be as secure as possible for our customers. We noticed that traders on some of the largest exchanges in the world are still sharing passwords between team members which is a disastrous security practice. VALR therefore built shared account access to give traders the ability to give view-only, trade-only and/or withdraw-only access to others in their team (or anyone else for that matter) — this is yet another reason why professional and sophisticated traders have come to prefer VALR.

Lastly, and most importantly, VALR is committed to the highest ethical standards. Those that have come to know us, trust us. In an industry which has been fraught with scandal and dubious morals, VALR stands for values and its commitment to truthfulness, transparency, and service.  

‍VALR has been expanding in recent months - what’s the experience been like in Asia and the Middle East so far, and what’s in store for Europe and the UK? 

In addition to our license in South Africa, VALR is also approved by the Polish Ministry of Finance to provide crypto asset services in the European Union. We also have Initial Approval from the Virtual Asset Regulatory Authority (VARA) in Dubai. To build a sustainable business, VALR is collaborating with regulatory authorities around the world to establish a regulatory framework where innovation can flourish while the interests of the public are safeguarded.  

VALR has team members all across the globe now and this is the first year we are taking deliberate steps to market ourselves outside the African continent as a global contender along with the largest crypto exchanges in the world.  

Some of our biggest traders are from Asia who use VALR as part of their global trading strategies, often taking advantage of FX to crypto market inefficiencies as well as other arbitrage opportunities.  

We’ve seen that as the regulatory environment in the United States has become more hostile in the past year or so, much of the trading has migrated east and we are proud to be serving some of the largest traders out of Europe and Asia.  

We are very aware of the significance of Asia when it comes to trading volumes. Financial hubs like Singapore, Tokyo, Seoul, and Hong Kong into South East Asia, offer tremendous opportunities and the growth in the crypto markets in these hubs is expected to dominate in the months and years to come.  

In June, we will be at The Digital Commonwealth Mansion House Summit in London. We will also be hosting some of our high-volume traders in Amsterdam during Money2020, and we’re sponsoring another prominent event in Paris as well.  

Our OTC desk is growing and we’re providing a white-glove service to a growing number of customers globally with USD, EUR and GBP onramps.  

‍What is your assessment of the industry - on the regulatory front, but also in terms of the industry’s ability to serve the masses and be reconciled with traditional finance, if at all?  

I think the crypto industry still has a lot of maturing to do. We’ve been beset by scandal after scandal over the past couple of years, but it’s important not to let the actions of a few individuals blind humanity to the significant promise that crypto offers to advance world civilisation.  

I have little doubt that the next reserve currency of humanity will be based on strong cryptography - that is to say it will be a crypto asset.  

Humanity needs a financial system that transfers value much quicker and much cheaper than what is currently available. Crypto assets enable people to send value across the world nearly as easily as sending an email. The experience will get better.  The industry will mature and will start to merge with traditional finance. Soon the financial landscape of the world will be as unrecognisable as it was when it shifted from physical bearer instruments to digital entries in computer databases.