Reserve Bank of Zimbabwe bans crypto trading

Reserve Bank of Zimbabwe (RBZ) said it has not licensed any person or company to deal, trade, buy, sell or invest in cryptocurrencies. Hence those trading would do so at their own risks.

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Financial institutions are required to stop crypto trading and transactions following an order by the Reserve Bank of Zimbabwe (RBZ). RBZ registrar of banking institutions, Norman Mataruka released a circular yesterday saying that the move will help to protect the public and safeguard the integrity, safety, and soundness of the country’s financial system.

Ban on Crypto Trading

To that end, the banks and financial institutions should disconnect from any relationships with virtual currency exchanges within 60 days. They should also liquidate and restitute existing account balances.

The order prohibits accepting cryptocurrencies as a collateral, opening accounts for crypto exchanges, and the transfer/receipt of money in accounts that are associated with cryptocurrencies.

The banks will not also be required to issue loans against virtual tokens, or do remittances, handle payment and settlement accounts, maintaining accounts, registering, trading, clearing, and collateral arrangements.  

The Central Bank governor John Mangudya also said that anyone who bought or sold cryptocurrencies online or offline will be doing so at their own risk and cannot have recourse to the Reserve Bank or any regulatory authority in Zimbabwe.

He added that the Reserve Bank has not permitted anyone to issue, sell, buy, exchange or inest in cryptocurrencies in the country. He added that the bank has not licensed or regulated crypto exchanges such as Bitfinance (Private) Limited (Golix) and Styx24. Golix is the largest cryptocurrency exchange in the country.  

Nevertheless, the bank will continue to monitor the regional and global developments about cryptocurrencies in order to inform policy direction, he said.

Last year, Bitcoin prices had doubled in the country in mid-November to reach $13,000 ahead of other markets that were registering an average of $7000 per bitcoin. This happened even as volatility hit the country to unbearable levels. The markets were short of local monetary assets and even the US$ 62 percent premium compared to bond notes and the rand was around 1:10 compared to bond notes.

Like many other countries, Zimbabwe is struggling to strike a balance between crypto regulation and the industry developments. The fear is about the risk of “money laundering, terrorism financing, tax evasion and fraud.

The circular to banks said,

“Financial regulators around the world have identified the dangers and risks presented by virtual currencies to financial stability which include risk of loss due to price volatility, theft or fraud, money laundering and other criminal activities. Further, cryptocurrencies can be used to facilitate tax evasion as well as externalization of funds in violation of a country’s laws.”

What is your take on the Reserve Bank barring financial institutions from cryptocurrency transacting and trading in Zimbabwe?

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David Kariuki is a journalist who has a wide range of experience reporting about modern technology solutions including cryptocurrencies. A graduate of Kenya's Moi University, he also writes for Hypergrid Business, Cryptomorrow, and Cleanleap, and has previously worked for Resources Quarterly and Construction Review magazines.

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