VALR Arbitrage is our international arbitrage service that takes advantage of differences in local and international Bitcoin prices to amplify your funds.
Why is there a difference in prices between South Africa and other markets?
The price of bitcoin in South Africa often trades at a premium to other international markets. The simple reason for this is that there is more demand than supply in South Africa due to exchange control (South Africa's capital control regime) and when there isn't enough supply of bitcoin to fully meet demand the price goes up on South African exchanges.
Does VALR decide what the price of bitcoin is on the exchange?
No. It's important to understand that VALR does not set the price of Bitcoin. Buyers and sellers on VALR determine the price based on where they are willing to buy and sell Bitcoin. It is a free market and the forces of supply and demand of our customers determine the Bitcoin price.
What do the specific terms mentioned regarding VALR Arbitrage mean?
- Arbitrage - Taking advantage of differences in the price of the same asset in two different market places by buying the asset where it trades at a lower price and selling the asset simultaneously where it trades at a higher price to lock in a profit.
- Single Discretionary Allowance (SDA) - Every Individual resident of South Africa is subject to exchange control which governs how much money they can send out of the country per year. Your SDA is available for whatever purpose you choose and the allowance for every individual over 18 years old is R1 million per year.
- Foreign Investment Allowance (FIA) - Every individual resident of South Africa is entitled to an additional R10 million allowance per year that they can take out of the country with prior approval from SARS. Residents of South Africa can make use of this allowance to procure Bitcoin as long as they use their own money and follow the legally approved process of obtaining clearance to do so, which VALR can assist you to obtain. You do not need to have R10 million in your bank account to access the full allowance per year, multiple applications can be made to access your allowance during the course of a particular year.
- South African Revenue Service (SARS) - The tax regulator in South Africa.
Why do I need a foreign currency account to use VALR Arbitrage?
Using VALR Arbitrage includes using your own funds to purchase cryptocurrency on international markets. These markets typically do not accept deposits in South African Rand and you'll need access to currency such as USD or EUR to trade in these markets.
Who owns/controls the foreign currency account I'll sign up for?
The foreign currency account you'll open is a bank account in your own name. This bank account belongs to you and you have full control to deposit, withdraw or use this account to purchase foreign currency at preferential forex rates that we have negotiated for our customers.
How long does it take to get my money back?
From a few days to a few weeks - it depends on how much capital you are trading. If you are doing a single trade, you should have your capital and profits back in your VALR account within days, depending on market conditions. Customers can also reuse their initial capital for several rounds of arbitrage trading. For example, if you have R200,000 in capital and you still have your full R1 million Single Discretionary Allowance to use, we will assist you to do 5 rounds of trading the same R200,000 capital which may take a week or two, but you will see your profits start accumulating after each round. It is important to note, though, that the higher the capital you have the greater the return will be (all other factors remaining the same) as the fixed banking FX costs don't need to be incurred for each round of the arbitrage trade.
Where do I sign up?
We'll provide more information about this product in the near future.