JOHANNESBURG — Backed by the likes of Naspers and Rand Merchant Investment Holdings, South African linked cryptocurrency exchange Luno – which started in the Cape – has expanded rapidly over the past few years. Previously called ‘BitX’, Luno now operates in more than 40 countries with its headquarters based in London. The company is also nearing the 2 million customer mark, according to Luno’s South African country manager Marius Reitz. In this interview, Reitz also tells me about the company recently winning a top award in the UK. – Gareth van Zyl
It’s a pleasure to welcome Marius Reitz, who is the South African country manager of what is the country’s best-known cryptocurrency exchange, Luno. Marius, Luno, which was previously known as BitX, started in Cape Town, but it is now a global operation. Can you tell us more about its background and where Luno is based around the world currently?
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Hi Gareth, yes, thanks for having me – it’s nice being on your show. We started as a B2B company and we built the first fully integrated Bitcoin system for a major multinational bank, that was way back in 2013. But we quickly realised that the banks were, and still are to some extent, too slow to bring this technology to the world. So, we decided to build a bank, a digital currency bank, where you can store, send, receive, buy, and sell your digital currency. Then in early 2017, we underwent a rebranding from BitX to Luno. Most Bitcoin companies have rather technical names and BitX was no different. We wanted our brand to be friendly and accessible for everyone, not just to techies and people on the technical front. We wanted a name that has positive connotations as well as showcasing the potential of the industry and its ecosystem. Right now, our goal is simply to be the easiest place to buy, sell, and learn about digital currencies like Bitcoin and Ethereum.
And you’re now based all over the world? It’s not just SA only – you’re in Europe, in Indonesia, Nigeria, all across the globe?
We’re operating in more than 40 countries spread across three continents, but we’re always looking for new countries to launch our product in, as long as the customers demand it. But our back-office is based in Cape Town, and it hosts all our core functions. Then we have country offices in Nigeria, Indonesia, Malaysia, Singapore and also in London/Europe.
So, is your biggest office then still your Cape Town office or have some of the other offices overtaken Cape Town?
Definitely our biggest office is Cape Town. As I said, we have all our core teams based in Cape Town, our customer support, engineering teams, finance – all the core functions. We have other country teams based in the respected countries that I’ve just mentioned.
Just coming back to your SA operation. Luno has some big SA investors behind it. You’ve got the likes of Naspers, and even Rand Merchant Investment Holdings. Can you tell us more about who’s backed Luno?
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We are very fortunate to have a few heavyweights like Rand Merchant Investment Holdings and Naspers as our investors. Naspers was our series-A investment round, that was in 2015. Then last year, around August/September, we announced our series-B investment round. That included Rand Merchant Investment Holdings, but it was also led by Balderton Capital, an investor in the UK. We’re very fortunate to have a investors whom we can leverage from and they’ve been very helpful over the past few years in helping us launch our business across 40 countries.
Do some of the members from those companies then sit on your board? Do they have a say in how thing operate and work?
To some extent, yes – I would say, more as technical advisors. We definitely have some of the investors sitting on our board. But, as I said, they are there more from a technical perspective, to help us with strategies in some of the emerging market countries we operate in and to provide us with insights into building a start-up company.
Marius, interestingly Luno was named the UK’s fastest growing startup in what is dubbed the ‘Tech 5’ competition. You are now in the final round of the competition to compete for the title of the fastest growing tech company in Europe. Can you tell us more?
Yes, it’s a fantastic way to acknowledge the hard work that the team has put in over the last few years, and to see that come alive with an award like this. We’re really proud to see that the hard work is paying-off and it really ignites our purpose by validating our role in the future of money. We’re really excited for this next round of growth ahead and we’re really happy with this award.
You must be making some serious waves in Europe to get an accolade like that?
Yes, I think coming back to our investors such as Balderton Capital in Europe: they really helped us with our operations in the UK and in Europe. I think the big driving force behind this and the hard work was building a real customer centric and user-friendly product. I think that’s one of the most important driving factors behind this, especially with all the uncertainty around crypto. Customers want to know that when they deposit money into Luno that their money is safe and we really do our part to educate customers and build our products in a user-friendly way. That has been the driving force behind our success in Europe.
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Just in terms of the cryptocurrencies that you currently sell on your platform. So, it’s Bitcoin and Ethereum, but would you be looking to introduce more down the line, potentially?
We’re always on the lookout but we won’t be adding for the time being. I think having extensive experience and working closely with many of the other currencies – we haven’t been overly impressed with the majority of them. Our concerns range from limited use cases and also, market adoption. Also, there’s concerns around a lack of proper security and many of them being actually just outright scams. So, for the time being, we’ve decided to focus on Bitcoin and Ethereum, and to perfect our offering around those two currencies. Maybe in the future we’ll look at additions, but we also need to be careful not to have too many as there are many cryptocurrencies that are either scams or going nowhere. It’s important for us then to give our customers the right products and services, and to protect them from scams. So, everything depends on our customers at the end of the day. We look at demand and we then assess if it makes sense and ultimately we do what will make them happy.
Just talking about demand, obviously, the Bitcoin and the Ethereum market prices have taken quite a knock since December. It seems to have levelled out somewhat now, but has this affected demand for your service in any way, the cooling off of these cryptocurrency prices?
Not really. We’re currently approaching 2 million customers globally, and the growth continues to be exponential. There’s really so much potential and a huge amount to achieve for Luno and the industry as a whole, over the next few month and years. I would say, in terms of trading volumes, yes, we’re seeing a slowdown. But in terms of new customers signing up for our platform and general interest across the industry – there is absolutely no slowdown on that front.
You mentioned that you’ve got 2 million customers, which is a massive number. So, what’s driving this demand for your service? What factors out there are prompting people to download the Luno app and buy some cryptocurrency?
Gareth, I think we’ve seen a massive spike in interest, especially interest in individual currencies globally. We believe this is as a result of customers re-evaluating their options and reimagining their financial potential. So, we want to upgrade them to that world where money is cheaper, faster, safer, and, also, where transactions are private but yet transparent. We’re giving our customers a vehicle to reach that future world and tools to enable their financial freedom. At the end of the day, that is what’s driving this spike. People seeking new ways to use their money that is cheaper, faster and safer.
Obviously, the SA Reserve Bank recently said that it’s taking a closer look at cryptocurrencies and SARS said that it’s also taking a closer look. So, have you had any regulators in the country asking you certain questions or making certain visits at your offices perhaps?
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We are very actively working with a number of central banks and regulators across the globe actually. In terms of local regulators, we attended the inaugural intergovernmental FinTech workgroup, and that was at the end of April where SARB and a few other government institutions facilitated the first workgroup. It didn’t only focus on cryptos. It also focused on financial inclusion, and technology innovation, and we participated in the discussions as a first round to help SARB formulate their position around regulation regarding the FinTech industry at large, and not specifically just cryptos. But all in all, we welcome regulation. We believe it can have a very positive impact. Ultimately, it brings clarity to businesses and consumers. It helps to keep out fraudsters, and other operators who have low regard or capabilities in keeping customer information and customer’s money safe.
Obviously, Luno uses the likes of Know Your Customer (KYC) type technologies as well, which I guess puts you in line with any possible regulation that could make its way into the market?
Yes, definitely. We follow an approach of self-regulation. So, as you know, the industry currently is unregulated. So, since day-one we’ve followed the self-regulatory approach. We make use of technologies to assist us with customer onboarding, the KYC of customers and, also, on the anti-money laundering front to help us to submit suspicious transaction reports to the regulators. But really, from our side, we are doing our best on a KYC and on the anti-money laundering front to comply with existing regulations.
Marius, looking forward. What are Luno’s plans for the next 3 to 5 years? Are you going to be expanding a lot more, like you have been doing over the last few years?
Yes, definitely. I think we are always looking to launch in new countries. We’ll definitely be bringing Bitcoin and Ethereum, or digital currencies at large, to new countries and new regions. Currently, I think our vision is to upgrade the world to a new financial system but that is our long-term plan. We believe that decentralised digital currencies, like Bitcoin, will fundamentally change how the world views and uses money. We are further busy building the product and that user experience that will give people access to the same financial system, no matter where they are or where they are from. So, at this point, we are focusing on perfecting our current offering and making the product as easy as possible to use, and as safe as possible. But, yes, we’re also looking to launch in new countries in the future, if our customers demand it.
Marius, thank you so much for taking the time to chat to me today.
Thanks, Gareth. I appreciate it.