Coinbase-Backed MARA Raises $23 Million To Build A Strategic African Crypto Exchange

The last few years have seen strong crypto adoption among young sub-Saharans Africans, primarily driven by the bleak economic realities in many countries in the region. However, crypto development and adoption in Africa appears to be entering a new age, with a growing number of African governments seeking ways to integrate crypto into their respective economies. In April, the TON Foundation announced that it was in conversation with three Central African countries to launch regionalized stablecoins. The Central African Republic also recently announced that it would make bitcoin a legal tender in the country.

Now, MARA, a new pan-African crypto exchange, is looking to sit at the intersection of the emerging government- and retail-led crypto adoption in Africa. The company has announced the raise of $23 million in equity and token sale from investors including Coinbase Ventures, Alameda Research (FTX), Distributed Global, TQ Ventures, DIGITAL, Nexo, Huobi Ventures, Day One Ventures, Infinite Capital, DAO Jones and about 100 other crypto investors.

MARA plans to launch a suite of products, including a custodial retail crypto wallet, a pro-exchange for professional traders and a layer-one blockchain that aims to become the go-to network for developers to build Africa-focused crypto and blockchain products. The retail app will launch in July, with the exchange coming after that, the company said. The MARA chain is scheduled to go live in the fourth quarter. Also, the startup will first launch in Kenya and Nigeria before expanding to other African countries.

MARA will find itself competing for market share against deep-pocketed incumbents such as Binance and Digital Currency Group’s Luno, as well as indigenous players such as Yellow Card, Quidax, Buycoins and Busha. Many existing exchanges offer just about every service needed to use crypto in Africa. Many of them have had to innovate around stringent regulatory realities to continue to provide crypto services on the continent.

For instance, many African countries prohibit local financial institutions from doing business with crypto companies, making it challenging to build on-ramp and off-ramp solutions on local payment rails. Many crypto exchanges serving African users have built peer-to-peer trading systems for on- and off-ramp purposes. Others use alternative means such as gift cards to help users get in and out of crypto.

MARA co-founder and CEO Chi Nnadi said his company is looking to set up differently by working closely with regulators as part of its product development process.

According to Nnadi:

“Building a crypto exchange involves interacting with regulators, who are at a critical point where they have to understand how to adopt crypto and how they are going to regulate it. One of my core competencies is sitting with them, understanding their pain points, and understanding how their life has changed dramatically in the last 20 years with tech adoption. And so, we are aligning ourselves as a point of education for them [the regulators]. You have to educate the regulators in the same way you’re educating the masses as to the benefits of blockchain technology.”

He believes that a pan-African exchange is better positioned to work with regulators to help bring blockchain’s numerous use-cases to reality in a scalable way.

He gave an example of how MARA intends to work with governments to help boost crypto and blockchain adoption:

“We’re running hackathons on digital ownership of patient records. These are the type of solutions that a 25-year-old blockchain engineer can build. But if there isn’t that sort of through-line or a bridge point to the government to healthcare organizations, it makes it harder for these use cases to just scale. That’s the really important thing about having MARA exist, plugging that gap between the young population and the regulators, who are sitting there, kind of held back by 20th-century structures, looking at these new technologies and how they have to build new structures with it.”

Nnadi was coy about MARA’s conversations with African regulators, saying that the countries are at different crypto addition and regulation stages. He did, however, admit that his company is speaking with Kenya, Nigeria, Kenya, Uganda and the Central African Republic (CAR).

The company also announced that it is working with the CAR in its bid to make bitcoin a legal tender.

“We’re coming in to advise them [CAR] on crypto adoption. There’re core things that need to be done in the country, as it would be in many countries in Africa, it’s to bring widespread crypto adoption,” he said. “We’re recommending a national ID drive so that they can [perform] KYC/AML on folks before they get into Web 3. [They need to] increase internet penetration as well so that people would be able to access crypto and the global crypto economy.”

Before starting MARA, Nnadi had built a non-profit called Sustainability International. Building on his parents’ work as environmental engineers dedicated to bringing environmental sustainability to the Niger Delta region of Nigeria, Chi Nnadi sort to use the blockchain technology to incentivize a community-driven clean-up of oil spillages financially. His non-profit built a smart contract in partnership with ConsenSys that used a combination of a computer vision algorithm that analyzes satellite imagery and pictures taken by local farmers to tell when a pond being cleaned has changed color and gotten cleaner. Upon confirmation of successful clean-up, the smart contract then pays participants in Stelar Lumens.

The smart contract project aimed to solve the problem of accountability and transparency that saw the hundreds of millions of dollars spent on the region yield little results in terms of actual oil clean-ups.

“I saw the before and after effects of capital not being dispersed, and it really angering the people. And so that was the idea. I was thinking, well, I can [relate with] the villager here, the chief, the head of Shell and the state governor, but all those people don’t meet in the same room,” Nnadi said. “And so, the idea was, how can you move them onto a digital playing field? And that’s when I started thinking about using smart contracts as a way of bringing them all into one room, essentially seeing myself as a no trusted node that can even move within all these different people.”

Though a noble venture, the smart contract project didn’t entirely take off because of crypto’s user experience (UX) limitations and literacy issues among local community members.

“At the time, stablecoins didn’t really exist, exchanges didn’t exist, and we still had to do cash on- and off-ramp for everybody. It just wasn’t scalable, realizing infrastructure has to be built, and everyone here has to have a wallet,” Nnadi added

Now that crypto UX has evolved, Nnadi is looking to promote similar development in the Mara ecosystem.

Other member of the startup’s executive team include: Lucas Llinás Múnera, Dearg OBartuin, and Kate Kallot.