The central bank of Zimbabwe, RBZ, has placed a ban given a directive to banks and financial institutions to stop processing transactions to do with Cryptos. 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 instituions.
The Irony…
That statement is a bit ironic in that anyone who has been living in Zimbabwe since 2000 knows that our country’s financial system is neither safe nor sound. Maybe they meant to say they do not want to compound already existent issues but I guess this will 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.
Following in the footsteps of others
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. I guess they were taking cues from countries such as Algeria, Bolivia, Ecuador and Bangladesh who are a few of the countries who have also banned Cryptocurrencies.
Activities being banned
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.
Cryptos were always a high risk
Well, 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.
We reached out to Golix and they said they had no knowledge of this directive:
We haven’t seen the directive itself. As soon as we see we’ll be able to comment on it
We are also reaching out to the recently introduced Styx24, which had been in the crypto trading game for just over 3 months.
This directive is also a major upset to the recently launched Dala crypto. Dala became available in Zim a few weeks ago –through Wala- and I think they did not foresee having to deal with this hurdle.
The government’s decision may have also been motivated by scams surrounding cryptocurrencies but I honestly do not think those were a major consideration since pyramid schemes were existent using conventional currencies.
What do you think about the governments position on Cryptos? Do you agree this is necessary or this is a major mistep?
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13 comments
they can’t even ban road port traders, but ban cytpo . sucks
There is no poverty like ignorance. Instead of being enablers of innovation, our regulatory institutions like the RBZ choose to be inhibitors.
Kutoda kutoiisa munhu wese munzara…They are depriving the nation of advancement and development….other countries are developing crypto ATMs and someone is telling us of protecting payment systems…This government must go we are not free
This is an ill conceived move that is taking Zimbabwe backwards!
The author needs to read the RBZ statement and interpret it correctly. Did “Bans Bitcoin And Other Virtual Currencies In Zimbabwe”?
stupid decision. crypto currencies like IOTA will be be used in VW vehicles in the near future used to pay electric charging stations, parking meters to participate in the data market place to sell information etc… crypto currencies are the future and zimbabwe will have no choice but to adapt
what a fun government
How can we as a community challenge such a move?
Zimbabwe is open for business
This is what happens in a country where economic policy and the financial services industry is managed by economic dinossaurs, who are completely out of touch with global technological trends in the financial services industry. I daresay, more worrying is that this policy decision betrays abysmal technical ignorance on the part of RBZ, which carries more profound dangers for the economic future of this country. What has undermined public trust in the Zimbabwe financial services system during the last 20 years more than shenanigans at RBZ – wholesale default on repayment of international loan obligations in 1999 without any serious attempt to re-nogotiate payment terms, liquidation of FCAs, introduction of bearer cheques & bond notes? The list goes on. Can anyone at RBZ stand up and tell citizens of this country of just one high value-adding economic policy initiative undertaken by the RBZ during the last 20 years, which has had long term positive amd lasting economic impact? Watch out Zimbabweans; you are on a slippery pathway to nowhere with this RBZ team! The same team legally mandated to advise Govt on sound and impactful economic policies has achieved endless negatives during the last 20 years. Encouraging and promoting economic delinquency, resulting in wholesale economic dysfunction during the last 20 years is in evidence for those who have eyes to see and brains to critically analyse cuases of national econoomic malaise.
Notably, during the GNU years when the RBZ had crippled itself to total ineffectiveness, the economy boomed without it. No sooner did it regain its effective powers that it resumed on its ruinous path, introducing dysfunctional bond notes on the basis of fake & false economic justifications.
Now the same team, instead of handling the emerging dynamic issue of cryptocurrencies with imagination ansd skill, as other central banks are doing around the world, decides to swim against global risk management best practices, demonstrating that RBZ is out of its depth technically, and dismally fails to grasp an elementary economic and investment principle, namely, that its decision is tantamount to attemting to shut off the internet – an exercise in utter futility (some would say, stupudity) – and that fundamentally the Market decides what constitutes Money, not dinossaur bureacrats pretending to be bankers who have the temerity to seek to convince all and sundry that bond notes have par value with the US Dollar, the most traded currency in the world today. Bureauctrats who do not keep abreast with international technological changes that apply to financial services worldwide have been dragging Zimbabwe’s financial services sector back to the 20th century.
Mr President, if you needed further evidence that it is long overdue for a total overhaul of RBZ management from top to bottom, and infusion of new professional blood, this is it. Your mantra “Zimbabwe is Open for Business” has just been seriously undermined by RBZ management which is unable to admit that it does not have requisite skills for today’s fast changing and globalized financial services sector.
In effect. the RBZ decision on cryptocurrencies hardly “protects the public and safeguards the integrity, safety and soundness of the country’s financial system” but achieves the very opposite. It derives citizens of participating in gainful but risky investments. Admission by RBZ that bond notes & shenanigans around it have contributed more to destabilizing and undermining public trust and confidence in the financial services system than the likely feared impact of trading in cryptocurrencies is what is required at this point in time. Anyone with a sound understanding of risk management will readily admit to this practical reality. What the RBZ ought to be doing as a matter of priority is fostering the adoption and implementation of robust & creative measures aimed at improving and enhancing risk management skills in Zimbabwe’s sickly financial services industry. Cryptocurrencies are here to stay as an integral part of the global financial services industry, whether the RBZ LIKES THIS REALITY OR NOT.
This is so by far a very bad move by the Zimbabwean Government. Since Golix has been gunnering innovation in the Crypto space in Afric, its sad new to hear that in a country like Zimbabwe where money itself is in shortage, they cant give room for alternatives. We look forward for a new open-minded and foreseeing Government.
Zimbabwe government ligalise dagga and ban cryptocurrency. What a old headed government it is. Investors run with your money while you still can.
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