Crypto arbitrage in South Africa


Crypto Asset Arbitrage is the practice of purchasing a cryptocurrency asset on local or international exchanges and selling it at a profit on South African exchanges. It is realistic because South Africa typically sees a 2–5 percent premium on the price of crypto assets. Compared to offshore USD markets during the last four years, local ZAR/Bitcoin markets have often traded between 3 and 5%, referred to as the arbitrage premium.

How crypto arbitrage works

With crypto-asset arbitrage, traders take advantage of market discrepancies in local markets rather than directly investing in the crypto asset. In South Africa, cryptocurrency arbitrage has grown significantly. Over time, stablecoins like USD Coin (USDC), pegged to the USD dollar, have proven more profitable for crypto arbitrage providers to trade.

Centralized exchanges are where the majority of cryptocurrency trading happens. Users can bid or ask for the cryptocurrency they wish to trade when a specific purchase and sell order match. This tactic benefits from the fact that cryptocurrencies are valued differently on various exchanges. Bitcoin might cost $10,000 on Coinbase, but it might cost $9,950 on Binance. The secret to arbitrage is taking advantage of this pricing discrepancy. A trader may purchase Bitcoin on Binance, move it to Coinbase, and sell it for about $200 more. It is often completed in less than a day and replicated whenever an appropriate arbitrage “gap” or profit arises.

Reasons why arbitrage opportunities exist

 Exchange regulations are responsible for these price discrepancies, which drive up the cost of assets like Bitcoin and the US dollar in South Africa. The R11 million yearly cap on foreign investments by South Africans, including cryptocurrency arbitrage, is a good signal of the increase in this trade.

This foreign investment allowance comprises the Single Discretionary Allowance (SDA) and the Foreign Investment Allowance (FIA). Participants in the SDA can export up to R1 million worth of money each year without requesting Reserve Bank permission. The FIA is worth R10 million annually and is only available to those who have obtained tax clearance from the South African Revenue Service (SARs).

The risk associated with crypto arbitrage

The significant risk is that the trade will fail due to a rapid movement in the price of either the currency or the cryptocurrency (which can take several hours). If a trader purchased Bitcoin for R640 000, and before it can be sold in South Africa, it fell by 1.5 percent to R630 000. Theoretically, that might eliminate the anticipated profit. Additionally, the BTC would be valued at about 1.4 percent less in Rands if the US dollar-to-rand exchange rate fell from R14.80 to R14.60. Open positions and the case of a rapid increase or decline in the market could lead to significant losses.

Other risk factors associated with crypto arbitrage include fees and trading volumes. Fees should be considered when trading because they can cancel any possible gains. Traders may want to avoid arbitrage disparities lower than 0.30 percent. Kraken fees, for instance, run from 0.1 percent to 0.26 percent. When it comes to volume, the more a cryptocurrency is traded, the more liquid it is, increasing the likelihood that trading positions will be executed.

Exchanges offering crypto arbitrage trading in South Africa


CURRENCY HUB crypto-arbitrage in South Africa has been in operation since 2017. The exchange conducts legal crypto arbitrage trading up to three times a day. With no exposure to Bitcoin, it oversees the entire arbitrage process for clients with stablecoins. With 10,000+ trades completed, trading volume for clients has exceeded R4 billion with no losses. From R1m traded over four days, clients have historically made between R10,000 and R30,000 in profits. Note: Past performance is no guarantee of future returns. The founders have expertise in traditional asset management. These include Forex, derivatives, cryptocurrencies, and stocks. FSCA and SARB approve the platform. It is worth noting that cryptocurrency is currently unregulated in South Africa.

Processing foreign exchange on the client’s behalf, the CURRENCY HUB service is integrated with their authorized dealers like Mercantile and Investec. The exchange has the OTC (over-the-counter) service, where users convert cryptocurrency to Rands to carry out the arbitrage and other hybrid counterparty risk considerations.  

Future Forex takes advantage of market inefficiency, so its customers’ returns are unaffected by changes in the overall price of cryptocurrencies. The exchange ensures that every trade follows the regulations before execution and is open about account handling. Future Forex does not impose management fees, which means they only profit when their customers do.

Full hedging ensures no exposure to foreign exchange or virtual currency. Proprietary trading infrastructure makes this possible by enabling simultaneous purchases and the sale of crypto assets. It features a simple onboarding procedure that guarantees clients may get going right away, and the tax professional team will help with FIA (Foreign Investment Allowance) applications at no cost. A committed and knowledgeable relationship manager is always available to help clients with their investments and guarantee they get the maximum return on their money.

South Africans Ardi Coetzee, Nico Lourens, and Nielbert Schmidlin established Koinexpert Arbitrage Services (KAS) in 2016. Koin Expert has developed a reliable and user-friendly system that provides flexible trading alternatives that reduce risk while trading. In comparison to other arbitrage trading services, clients receive the highest returns.

The KAS system enables customers to access top-notch KYC (Know Your Client) and AML (Anti-Money Laundering) systems. It allows forex payments through registered financial service provider partners and trades customer funds back from abroad via cryptocurrency to make a profit for the customer.

Customers receive assistance in opening a new bank account and choosing one of five potential currency intermediaries. When the funds have been received in USDC, Koinexpert Technology analyzes prices across several markets and places trades when the market is most advantageous.