Why South Africa needs a Stablecoin Alliance - the Springbok strategy that could make us global leaders

Authored by Sean Emery, CEO of RainFin

I was lucky enough to be invited by VALR to watch the Springboks take on Australia this weekend at Newlands, and it got me thinking about teamwork versus individual competition.

I've been building fintech companies in South Africa since 1998, and I've learned some hard lessons about what happens when local industries fragment just as global competition arrives at our doorstep.

Back when I founded my first company, we were all competing fiercely against each other for the same small market. What happened? We stayed fragmented just as international players started eyeing South Africa. While we burned through funding, fighting each other, the global companies were building scale and preparing to enter our market with resources we couldn't match individually.

It's a pattern I've seen play out across South African industries. Local companies are competing for scraps while international players arrive with established infrastructure, global reach, and massive balance sheets. By the time we realise we need to work together, it's often too late.

Now we're about to repeat the same mistake with stablecoins, and the stakes are higher than ever.

The global stablecoin competition that's coming

While South African CASPS plan their individual ZAR stablecoin launches, global players are already circling. Established stablecoin operators with billions in assets under management are looking at emerging markets like South Africa as their next growth opportunity.

The reality is harsh - these international operators have already solved the complex problems. Like Uber, they're not intimidated by local regulations because they've navigated them in dozens of other countries. They have war chests that make our funding rounds look like lunch money. And they've got relationships with global financial institutions that we spend years trying to build.

Here's what really gets me: every local bank will take their call immediately, while some of those same banks won't even return ours. We roll out the red carpet for foreign players while making our own companies jump through endless hoops.

More concerning, they don't need to understand local nuances or serve South African consumers particularly well - they just need to offer a functional product backed by global scale. If we're fragmented into five or six competing local offerings, each with limited liquidity and resources, we become easy targets for displacement.

Lessons from other markets

I've watched this dynamic play out in payments, lending, and other fintech verticals. Local companies spend years competing against each other, building separate infrastructure, duplicating costs. Then a global player enters with a standardised offering, massive marketing budget, and regulatory teams that have already solved similar problems in other markets.

The local players suddenly realise they need to consolidate or partner. Still, by then, the market opportunity has shifted to defending against a well-resourced international competitor rather than growing a domestic industry.

What's different about stablecoins is that we still have time. The regulatory framework is still developing globally, South African regulations are taking shape, and the local market hasn't crystallised around any particular approach yet.

Building our competitive moat together

Here's what I've learned from decades in this space: individual South African companies rarely have the resources to compete head-to-head with global players. But collectively, we can build something that's actually harder for international competitors to replicate or displace.

Through industry working groups, we've been developing a multi-issuer stablecoin alliance that creates exactly this kind of defensive moat. Instead of each CASP building separate infrastructure, we create shared foundations that benefit everyone while being uniquely suited to the South African market.

When multiple licensed financial service providers issue stablecoins backed by the same professionally managed South African money market fund, we create several competitive advantages that global players can't easily match:

• Local regulatory expertise: we understand SARB requirements, FSMA compliance, and South African banking relationships in ways that international players will take years to develop.

• Domestic market focus: our reserves are invested in South African instruments, supporting local markets while generating returns that stay in the country rather than flowing to offshore parent companies.

• Collaborative scale: by pooling resources, we achieve the scale needed to compete with global players while maintaining local ownership and decision-making.

• Regulatory partnership: by working together on compliance standards, we can shape the regulatory framework in ways that favour collaborative local approaches over international extraction models.
  

Why banks need this to succeed, too

Here's something I've learned from years of working with major financial institutions: they're facing the same competitive pressures we are. Global fintech companies and international banks are eyeing the South African market share just as aggressively.

When local fintech and banking sectors work together on shared infrastructure, we create a stronger ecosystem that benefits everyone. Banks get innovative payment rails and customer engagement tools they can white-label or integrate. Fintechs get access to banking infrastructure and regulatory expertise they couldn't build alone.

Most importantly, we create a domestic payments ecosystem that competes effectively with global alternatives while keeping economic value in South Africa.

A unified stablecoin network changes this dynamic entirely. Instead of banks having to choose between building their own expensive infrastructure or licensing from international providers, they can participate in a local alliance that serves their customers while supporting the broader South African financial sector.

The economic benefits of keeping it local

This isn't just about competition - it's about where economic value flows. When South Africans use international stablecoins, the yield generated by reserve management flows to offshore entities. When they use local stablecoins backed by South African money market funds, those returns stay in our economy.

With South African money market yields currently around 7-8% annually, this represents significant economic value. In a collaborative model where yield flows back to network participants based on their proportional contribution, everyone benefits from keeping this value domestic.

More strategically, we retain control over our financial infrastructure. When critical payment systems are owned and operated internationally, we lose sovereignty over monetary policy tools and financial stability measures.

The regulatory opportunity we have right now

While we don't yet have specific stablecoin legislation from South African regulators, we have a unique window to adopt global best practices collectively and help shape the regulatory framework.

International stablecoin operators will eventually comply with whatever rules get established, but they'll adapt their global systems to meet minimum requirements. We have the opportunity to exceed those standards and demonstrate that collaborative local approaches can deliver superior outcomes for regulators and consumers.

By working together on reserve management, compliance procedures, and operational standards, we create a framework that showcases South African financial innovation rather than importing solutions designed for other markets.

The personal urgency I feel

I've spent too many years watching South African industries get disrupted by international players who arrived after local companies had exhausted themselves competing against each other. Telecommunications, e-commerce, digital media - the pattern is always the same.

We fragment locally while global players build scale internationally. By the time they arrive in our market, we're too small individually to compete effectively and too late collectively to create the partnerships needed for defence.

Stablecoins represent one of the most significant financial infrastructure opportunities in decades. If we get this right, if we build it together, we create something that serves South African consumers better than international alternatives while keeping economic control domestic.

If we fragment and compete against each other, we'll hand this opportunity to global players who will extract value from our market while contributing little to our broader economic development.

Building something uniquely South African

The collaborative model we're proposing isn't just about defence against international competition - it's about building something better suited to South African needs than global solutions could ever be.

Local banks understand our regulatory environment, our customer needs, and our economic realities. Look, we have something in our DNA that you can't import or copy. It's like our rugby - we play a different game than everyone else because we understand what it takes to compete when you don't have the most significant budget or the fanciest facilities. We know how to make things work with what we've got, how to innovate under pressure, how to build solutions that actually serve our people. When we combine that South African grit with shared infrastructure, we create something that has our fingerprints all over it - not just another generic global product trying to speak with a South African accent.

The result is a stablecoin ecosystem that serves South African consumers better while keeping economic benefits local and maintaining the innovation that makes our fintech sector globally competitive.

The choice that will define our industry

We're at a moment that will determine whether South Africa develops its own financial technology leadership or becomes another market that imports solutions designed elsewhere.

We can build shared infrastructure that makes us collectively strong enough to compete with anyone, or we can fragment into competing silos and watch international players capture the opportunity we should be developing together.

The future of South African digital finance is being written right now. We can write it ourselves, or we can let others write it for us. What will it be?

Disclaimer: The views and opinions expressed in this article are those of the author in their personal capacity and do not necessarily reflect the official position of the FinTech Association of South Africa (FINASA). This piece has been published as part of FINASA’s commitment to providing its members a platform to share their perspectives with the broader fintech community.