The central bank of Zimbabwe, RBZ, has given a directive to banks and financial institutions to stop processing transactions to do with cryptocurrencies. The measures are apparently being taken to “protect the public and safeguard the integrity, safety and soundness of the country’s financial system.” The ban applies to all financial institutions.
That statement is a bit ironic in that anyone who has been living in Zimbabwe since 2000 knows that the country’s financial system is neither safe nor sound. Maybe what they may have meant to say is they do not want to compound already existent issues but this might be made known as this is a controversial stance that will garner a strong response from the public, especially those who are already trading.
The statement from the RBZ reads: “As monetary authorities, the Reserve Bank of Zimbabwe is the custodian of public trust and has an obligation to safeguard the integrity of payment systems. cryptocurrencies have strong linkages with standard means of payments and trading applications and rely on much of the same institutional infrastructure that serves the overall financial system.”
John Mangudya, RBZ governor, in a separate statement, said the RBZ would continue to monitor regional and global cryptocurrency developments in order to inform policy direction. They may have been taking cues from countries such as Algeria, Bolivia, Ecuador and Bangladesh who are a few of the countries who have also banned cryptocurrencies.
Under RBZ’s directive a number of activities have been highlighted as illegal and these include:
- Accepting cryptos as collateral
- Opening accounts of exchanges dealing with them
- Transfer/receipt of money in relating to purchase/sale of virtual currencies
The financial institutions that are trading have been given 60 days to exit any relationships with virtual currency exchanges so at least they have been given an opportunity to sell what they had. This means over the next 60 days Zim is probably going to be a good place to buy cryptos as these institutions will be trying to sell as much as they can before the harsh hand of the law is placed upon them. RBZ is yet to make it clear what action will be taken if some institutions do not comply with the directive.
The financial institutions -your banks and the likes of EcoCash- were the guys enabling people to trade. This means that although this ban is directed to financial institutions it still leaves everyone in the cold. As long as the government had not stated its official position on cryptos, there was always the risk that once they did, things would go south but no one really expected a ban. Keeping that in mind there was literally a 50/50 chance and that made the cryptos risky. Coupled with the mixed opinions about cryptos which sees influential figure such as Bill Gates sounding very cautious about the currencies.
The government’s decision may have also been motivated by scams surrounding crypto-currencies but I honestly do not think those were a major consideration since pyramid schemes were existent using conventional currencies.
Source – TechZim