Cape Town-based Crypto Wallet and Exchange Company Luno announced last week (9 September) that it had been purchased by the Digital Currency Group (DCG). Luno which was founded in 2012 by Marcus Swanepoel, Timothy Stranex, Francois Paul and Carel van Wyk, was created with the goal of using cryptocurrencies and blockchain to upgrade the world to a better financial system and reach 1 billion people by 2030.
Luno today operates in 40 different countries, has over 5 million customers and has processed $14 billion in cryptocurrency transactions. Luno has seen growth year on year and has stated the reason they chose to join with the DCG is to, “further evolve in an ever-changing industry and to integrate across the entire industry and value chain, in order to effectively upgrade the world to a new, better financial system”.
Why Join with DCG?
DCG is located in New York and is a venture capital company centred on digital currency markets. DCG was also one of Luno’s earliest investors in 2014 and it’s this early relationship that gave Luno confidence in being purchased. The founders of Luno have stated that there will be no changes in how Luno is run from its app or desktop platform. They also mention that the founders and a few other investors will become shareholders in DCG as part of the purchase.
This purchase is great for Luno in its aim of expanding into new lucrative markets, the move to the New York-based company DCG will definitely help with achieving that, but it does look like an effort to centralize a future financial system in the US. The US in recent months has planned to introduce new crypto regulations which could affect Luno and its customers, as they will have to adhere to US laws and regulations over South African ones.
Luno’s customers will eventually be subjected to how other crypto wallets and exchanges operate in the US and therefore lose its uniqueness and appeal. South Africa at the moment is yearning for its own financial system to be strong enough to be able to project financial influence globally, this is something that cannot be underestimated and would have probably been more desirable if Luno had stayed independent or look for a South African company to purchase it.