1. As the first recipient of the Custodian Services (Digital Asset) license granted by the Financial Services Commission (FSC) in 2022, MINDEX has now completed its second year of operation. Could you please provide an overview of the developments and achievements that have transpired over the past two years for MINDEX?
On a global scale, the last 2 years have seen tremendous development in the virtual assets space. We are increasingly seeing major economies regulating the virtual assets space. Central banks around the world are actively exploring the development of Central Bank Digital Currencies (CBDCs) and large corporations are proactively accepting payments in crypto.
For MINDEX, it has been a momentous journey of many firsts over the last two years. It all began in December 2022 with MINDEX Digital Custodian being licenced as the first regulated digital custodian in Mauritius and also in Africa.
In terms of new product/service offerings, MINDEX has gone from strength to strength with three new licences under its belt:
- The digital securities exchange licence in February 2023
- The clearing house licence in February 2023
- The Virtual Assets Marketplace licence in December 2023
Overall, MINDEX is now well poised to offer a digital custodian, securities exchange, clearing and settlement facilities as well as a virtual assets marketplace under three separate group entities and four licenses in Mauritius.
In terms of actual activities, MINDEX officially started business in March 2023. Since then, we have onboarded a number of licensed entities including funds, investment advisors and broker dealers, who are currently availing MINDEX’s digital custody services. Since September 2023 alone, MINDEX has conducted over USD50m related transactions.
As the icing on the cake, we went ahead in February 2024 with our first listing, duly approved by the listing committee at MINDEX for a major player operating in the retail market in Mauritius.
Globally, we have secured partnerships with a securities exchange in Singapore and one in the US for potential multiple listing of assets.
Looking ahead, MINDEX has a number of listings of STOs and ITOs internationally in the pipeline.
2. Could you share with us the vision and objectives of MINDEX?
The vision for the MINDEX Group was and remains that of building a complete and regulated financial infrastructure that can bridge the gap between the traditional financial system and the digital arena, while at the same time addressing financial infrastructure gaps and inefficiencies within the African region. Our objective is to roll out unique financing models for businesses and infuse the necessary liquidity to match the needs of the continent, including by tapping into the potential of cryptocurrencies within a completely regulated ecosystem.
Ultimately, MINDEX aspires to create a fairer and more inclusive Africa, for the many and not for just a few, by allowing the growth of businesses of all shapes and sizes, using automation, Artificial Intelligence and blockchain technology.
3. How can MINDEX be instrumental for Africa and for the capital market development in Africa?
At the outset, the difficulty of cross border payment in Africa is very real. According to the IMF a key ‘…problem for Africa’s economic development – is the expense and difficulty of making payments across borders. It is one reason trade among Africa’s 55 countries amounts to only about 15 percent of their total imports and exports. By contrast, an estimated 60 percent of Asian trade takes place within the continent. In the European Union, the proportion is roughly 70 percent’.
Further, according to the United Nations, Africa loses US$89 billion annually, about 3.7 per cent of its gross domestic product (GDP), in illicit financial flows.
Against this backdrop, it is important to innovate. Otherwise, Africa will keep playing catch up, and development can only be sporadic.
Technology will, in my view, allow a possible leapfrog by Africa over more sophisticated regions, which have legacy to deal with. Therefore, support and development of the FinTech industry is key to the region’s sustainable development. African economies leading in the mobile payment space worldwide is not a surprise, what they address is a real need and infrastructure gap. It is not hype or a bit of automation, the idea is to optimise payments.
At the same time, it cannot be denied that there are substantial financial infrastructure deficiencies in Africa, the results of which are the following:
- High cost of transactions (such a brokerage fees), due diligence and settlement.
- Dearth of exchange currency (mostly US dollar)
- Convoluted administrative processes, leading to long delays and trade inefficiencies.
- Sensitive data mismanagement, because of the absence of centralised / inter-operable /integrated KYC systems.
- Lack of accessibility and flexibility both in the public and the private market in terms of capital & asset management.
- Domestic exchanges in Africa operating in silo.
Towards this end, the MINDEX Group is planning to develop satellites exchanges across Africa in partnership with local public or private entitles, in an attempt to link the various jurisdictions, thereby increasing the exposure of the listed assets as well as the pool of liquidity, by seamlessly allowing citizens of those jurisdictions to acquire assets from other jurisdictions within the MINDEX Group ecosystem.
As a long-term objective, the MINDEX Group is working with industry leaders across the African continent to create and list innovative financial products to increase the quality of products listed and further the connection to crypto exchanges worldwide, to tap into crypto liquidity.
