Luno sets target of a billion customers in 10 years

Written by Ciaran Ryan. Posted in Journalism

The recent buyout by Digital Currency Group gives it a head start. From Moneyweb.

Luno co-founder Marcus Swanepoel says crypto adoption in Africa is exploding. Image: Supplied
Luno co-founder Marcus Swanepoel says crypto adoption in Africa is exploding. Image: Supplied

Launched in 2013, crypto exchange Luno has built up an astonishing customer base of five million in 40 countries, with more than one million of them in SA.

But that’s nothing compared to what lies ahead. Speaking on the future of crypto in Africa via webinar last week, co-founder and CEO Marcus Swanepoel outlined plans to grow Luno’s customer base to one billion within the next 10 years.

That’s Facebook-type levels of penetration – but Swanepoel believes it’s doable.

“It may seem unrealistic to say we want one billion customers, but we have the momentum and the adoption is accelerating by the day,” he said.

Luno is betting big on an accelerating rate of crypto adoption across the globe. It was recently bought out by US-based Digital Currency Group (DCG), which has investments in some 160 companies involved in cryptocurrency and blockchain development

.Read: SA crypto pioneer Luno finds a US buyer

This will give it the financial and technical muscle to tackle retail markets in new countries. Future plans include deeper penetration of the UK and European markets, and the US at a later stage. The company recently launched a crypto exchange in Australia, and already has a presence in several European countries.

The company had a major hand in persuading South Africans to adopt cryptocurrencies such as bitcoin, then took the same message to other countries in Africa, Asia and Europe.

The financial crisis of 2020 has been a gift to crypto exchanges like Luno, which initially focused on a single cryptocurrency, bitcoin, but has since added several more, such as Litecoin, Bitcoin Cash, XRP and Ethereum.

Swanepoel says crypto adoption in Africa is exploding, a trend accelerated by the Covid pandemic and fears that local fiat currencies will continue tanking against safe haven assets such as the US dollar and gold. After a wild and volatile start 12 years ago, bitcoin and other cryptos have shown an increasing correlation to gold and are now seen as a hedge against reckless government financial conduct, with budget deficits running out of control across the world.

What’s driving crypto’s growth in Africa

Explaining why Africa is ripe for mass crypto adoption, Swanepoel identified the following trends driving Africans to the crypto sphere:

  • High inflation and dollar scarcity;
  • Political instability and capital control;
  • Poor financial infrastructure;
  • An accelerating trend towards digital and mobile money; and
  • The high cost of transacting using conventional means.

“It’s still so expensive to use money [in Africa], whether for remittances or online payments, or even to withdraw funds from a bank – something that is unheard of in Europe. This is laying the platform for big growth in crypto in Africa,” he said.

Africa-destined remittances totalled $40 billion in 2019, with 10% of that going in fees. African e-commerce transactions exceeded $30 billion last year, with fees of $1 billion. Identity theft and cybercrime cost Africa $3.5 billion in 2017. Combined, this adds up to a massive leakage of wealth from the pockets of consumers.

“All this value currently captured by financial institutions could be released to consumers,” said Swanepoel.

The removal of capital controls could increase GDP by between 1% and 2% in some African countries, and expand inter-African trade by 52%.

A more inclusive financial system could see deposits increase by $1 trillion in Africa.

All this suggests the existing financial system, captured by traditional financial institutions and their loaded fee structures, is ripe for the picking.

The obstacles to wider crypto adoption are:

  • Inadequate internet coverage;
  • Competition from mobile money; and
  • Resistance from regulators and financial institutions.

“Some regulators are pro-innovation but want to make it safe for consumers, so we spend a lot of time with them to prove we look after clients,” said Swanepoel.

A new financial system

The new crypto economy will soon offer everything the existing system does, but with more variety and safety – and at lower cost.

Speculators love the volatility of bitcoin (though volatility is reducing as more people enter the market) and altcoins, and huge numbers of traders have diversified from stocks and forex to the crypto market.

A big challenge for cryptos is to achieve universally-accepted payments, and that is also now within reach.

PayPal recently announced that US account holders will be able to buy, sell and hold cryptocurrencies in their PayPal wallets over the coming weeks. Many new payment solutions are already in place, and building out the networks and scale needed to achieve a universal payments system will likely happen within the next few years.

Read:PayPal CEO says cryptocurrencies are just an experiment for now (Mar 2018)

Bitcoin on the brink of fresh year high following PayPal embrace (Oct 2020)

Another development already at an advanced stage is collateralised borrowing using cryptos. Virtually everything available in the traditional financial space is now (or soon to be) available in the crypto sphere.

“We are starting to see a shift towards crypto investments and even crypto-backed credit, and this will grow over time,” said Swanepoel.

An amazing seven years

“It’s been an amazing seven-year journey, but the best is yet to come,” added Swanepoel, who started out working in the banking sector in Asia, Africa and other emerging markets. “In 2013 I moved to Palo Alto [California], where all the tech companies are located. Someone introduced me to bitcoin and explained how you can move value anywhere in the world.

“I had an epiphany moment, and saw how this new technology could influence things positively, so I got together with my partner to start Luno.”

Luno GM for Africa, Marius Reitz, says customers have understandable concerns over the security of their deposits. “We’ve been around since 2013, and never been hacked. We have five million customers in 40 markets, so we take our security seriously.”


Several layers of protection keep hackers and thieves at bay, including cold storage (storing funds offline and away from the internet), safe keeping of private encryption keys with the need for a third party key to effect any transaction (which means two people must authorise a transaction), and multiple vaults requiring any hacker to get into more than one vault at the same time.

Customers can add additional security using two-factor authentication (a time-sensitive code that must be entered from your smartphone) and a ‘disable send’ feature that stops anyone from sending your crypto anywhere in the unlikely event they do get into your account.

Asked how to detect crypto scams, Reitz replied: “Anyone saying you can’t lose money is suspect. Do some due diligence, and look to see who runs the company. When anyone says you must invest now, that’s a red flag – run away. Also, don’t allow others to trade on your behalf.”

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.