Why would anyone invest in a stablecoin? That question resurfaced on social media last week with the launch of ZAR Universal (ZARU), South Africa’s first institutional-grade rand stablecoin.
ZARU is the product of a collaboration between some of South Africa’s most forward-thinking financial institutions, including Luno, Sanlam, EasyEquities and JSE-listed fintech group Lesaka, combining financial infrastructure with blockchain innovation to enable real-world utility and drive meaningful adoption of a rand-backed digital asset.
Its institutional ties also tick the boxes for commercial use. Moving funds internationally from the UK to South Africa can take five days with traditional banks. ZARU offers T+0 (instant) settlement, and the blockchain doesn’t close on weekends.
The ZARU coin is backed by high-quality liquid rand-denominated assets, cash, bank deposits and South African government bonds. Moore Johannesburg reviews these reserves monthly to ensure transparency and stability. Crucially, keeping these underlying assets within South Africa’s financial system creates global demand for rand-denominated assets.
A quick bit of trivia to help answer why investing in a stablecoin is worthwhile. When these digital currencies emerged in the mid-2010s, they served a specific purpose for crypto traders in providing an on-chain safe harbour where they could park capital and move in and out of volatile crypto markets without converting back to traditional currency.
The solution was a cryptocurrency at heart but pegged to something more stable than other crypto assets driven purely by market forces
This was crypto’s early era, a time when the markets were (believe it or not) far more volatile than today. Prices swung wildly due to relatively few active investors in these markets. The solution was a cryptocurrency at heart but pegged to something more stable than other crypto assets driven purely by market forces. That anchor turned out to be the US dollar, chosen for its role as a global reserve asset and relative stability. Tether pioneered this concept with USDT in 2014, which remains the most widely used stablecoin today.
Stablecoins were never designed to appreciate or serve primarily as an investment, though US dollar stablecoins do provide easy access to investing in the dollar globally, especially in developing countries. Their initial purpose was to be tied to a stable currency, such as the dollar, to facilitate trade.
This history matters because it shows how far stablecoins have evolved and helps correct a fundamental misconception: why would anyone want a stablecoin backed by the rand?
South African financial leaders grasped the use case of a digital rand settling on crypto infrastructure, enabling instant settlement whether you’re sending ZARU from Cape Town to Joburg or from Joburg to London.
For everyday investors, investing in the rand may not seem compelling, setting aside the discussion of yield-bearing rand investments for now. But for trade? That’s a different story entirely. The rand is the 18th most traded currency globally and is essential for Southern African commerce.
ZARU enables regional and global trade without reliance on the US dollar. And when businesses can bypass the roughly five-day settlement period required by traditional banking channels, it becomes a transformative engine for the entire financial system.
Christo de Wit is country manager for Luno South Africa
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