Emerging market citizens, including those from Africa, are turning to crypto-friendly international private banks and cryptocurrencies to secure their money offshore, with Gibraltar emerging as an unlikely safe haven.
Xapo Private Bank, a Gibraltar-based international private bank, has seen a 16% growth in clients from emerging markets since the beginning of 2023, and new memberships tripled from February to March. Of the bank’s new members, 12% were from South Africa, and 2% were from Nigeria, which signifies a significant movement of capital – both in fiat and cryptocurrencies – from African banks to Gibraltar.
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While international private banks in Switzerland and Luxembourg have long been popular with wealthy families around the globe, Gibraltar in southern Europe is seeing its popularity rise because of its sophisticated and modern regulatory regime. The Gibraltar Financial Services Commission regulates both traditional retail and private banking and Virtual Asset Service Providers (VASPs) to UK and EU standards.
“Gibraltar is setting itself apart as a modern banking hub because it is able to properly regulate private banks with strong fiat currency and cryptocurrency offerings,” says Seamus Rocca, CEO of Xapo Bank. It is the first fully licensed bank in the world to enable members to transact in both USD and USDC, as well as Bitcoin, through one secure app.
Rocca says private banking, and especially crypto-friendly private banking, is growing in popularity worldwide as those with the means look for new and more diverse ways to protect their assets.
“Traditionally, private banking was available only to those with R85-million (about $5m) and upwards, but that’s starting to change. It’s now possible for people earning between R1.3 and R2m ($75 000 to $100 000) a year – a group referred to as the ‘mass affluent’ – to seek financial safety in international private banks – and that’s democratising global banking,” says Rocca.
Rocca believes the emergence of a new international class of mass affluents is an important opportunity to shift global wealth distribution.
“We have members in more than 50 countries, but what we’re seeing now is a much larger influx from emerging markets such as Nigeria, South Africa, Argentina, Brazil, and Lebanon, where the government suddenly decided to confiscate deposits. These countries are currently facing heightened country and currency risks.
“Their flight to international private banks and to cryptocurrencies is telling us that global patterns of wealth distribution are starting to shift, and that international private banking is no longer just for ultra-privileged Europeans.”
Rocca believes rising interest rates and inflation, higher market volatility, trade imbalances, and other risk factors are pushing emerging market citizens towards new safe havens. While one of these havens is international private banking, the other is Bitcoin, which clocked a new high at $29 000 this week and which global tech leaders such as Jack Dorsey of Block are viewing as a vital financial solution for Africans.
“We agree with Dorsey’s assessment that Bitcoin will reach mass adoption in Africa, not just because it’s sovereign, finite, immutable, and secure, but also as a result of the recent launch of the Lightning Network. Lightning payments will turn Bitcoin into a universal currency for smaller daily transactions in Africa,” says Rocca.
Rocca concludes: “The world is changing, and the time has come to combine the security of centralisation, the freedom of decentralisation, and the immutability of the blockchain as a bridge between the old CeFi and new DeFi worlds. That’s how we’ll take international banking and financial access forward in the years to come.”