Absa Brings Digital Asset Custody to African Banking

An African first: This week, Absa became the first African bank to launch digital-asset custody, initially for institutional, corporate and large business-banking clients. As one of Africa’s largest banks, Absa operates across ten African markets and serves over twelve million customers. Its new service runs on Ripple’s custody technology and initially supports bitcoin, XRP, USDC and RLUSD.

• Why it matters: Until now, much of Africa’s crypto activity has grown outside traditional banking channels, driven by remittances, cross-border trade and demand for dollars in markets with less stable local currencies. South Africa’s largest banks are now trying to bring part of that activity inside regulated banking. Unlike many European peers, which entered through crypto trading and investment products, their early focus is on stablecoins, treasury management and more efficient cross-border payments.

Custody first: Custody sits at the foundation of Absa’s strategy. According to Robyn Lawson, Head of Digital Product: Custody at Absa CIB, the bank began looking seriously at digital assets around 2022 and spent roughly three years moving from experiments into production.

• “A bank’s role is to keep its clients’ assets safe. If clients trust us with their traditional financial assets, why wouldn’t they trust us with their digital assets as well? But custody is only the starting point. What we ultimately want to provide is wallet infrastructure that enables clients to participate in a broader ecosystem without compromising our responsibility to safeguard their assets. As a bank, that is not something we want to outsource,” Lawson told Blockstories.

A dollar market: Absa is building those wallets for a market that already uses crypto primarily to gain dollar exposure. The bank estimates that the vast majority of balances held on South Africa’s five largest crypto exchanges are in stablecoins, predominantly USDT.

Common strategy: That dollar demand is also visible in the digital assets strategies South Africa’s other large banks are pursuing. Nedbank is working with Crypto.com on rand-to-USDC conversion, dollar liquidity and settlement, while FirstRand uses J.P. Morgan’s Kinexys to move dollars between group entities around the clock.

• Standard Bank goes further: Africa’s largest bank by assets has already processed more than R1 trillion (roughly $61 billion) through Aroko, its blockchain-enabled cross-border settlement rail. It is also the only African member of a 21-institution consortium alongside Bank of America, Santander and UBS that plans to launch a US-dollar stablecoin in the first half of 2027, with other G7 currencies intended to follow.

The 8.46% problem: For all four South African banks, the common thread is building digital assets infrastructure to move money more efficiently. Domestic payment systems in South Africa work well, but cross-border flows still have to bridge separate currencies, banking networks and settlement systems. Sending $200 to Sub-Saharan Africa costs 8.46% on average according to the World Bank, the highest of any region. Stablecoins provide banks with another way to move dollar value across markets without passing through the same chain of correspondent accounts and settlement windows.

A head start on rules: South Africa has been able to move first because the institutional groundwork is already there. The FSCA, South Africa’s market conduct regulator, has licensed crypto service providers for several years, while the central bank has tested DLT with the country’s major banks since Project Khokha in 2018. Other markets have more crypto users but give their banks less room.

What comes next: Absa plans to take custody into additional client segments and, over time, across its nine other African markets. How far that extends into cross-border payments will partly depend on South Africa’s evolving exchange-control framework. Draft rules published in August would bring certain crypto transfers into the country’s exchange-control framework, potentially giving regulated banks a clearer route to offer those services. Comments close on 30 September.

• “Regulators recently issued draft guidelines on exchange controls, which are currently open for public comment. For regulated institutions such as banks, this could create significant opportunities to use digital assets for cross-border payments in South Africa,” Lawson said.