It may seem like all we are talking about is the Reserve Bank of Zimbabwe’s (RBZ) ban on cryptocurrency trading lately. I believe we have good reason to do that. That kind of decision making by the RBZ needs to be nipped in the bud.
This is not necessarily because we believe in cryptocurrencies but rather in innovation and new technologies. We cannot outlaw technologies simply because we do not understand them. The RBZ wants other countries to come up with their own regulation so that we can copy. We cannot condone the follower mentality, it has not served us well thus far.
For one, those countries we intend to copy do not have identical circumstances to our own. Consider that we have a weak economy, importing more than we export. We do not have a currency of our own but depend on the USD, the Rand and the hybrid and ridiculous Bond Note. We have a massive number of Zimbabweans living outside the country remitting millions every year.
Do we really expect countries that do not relate to the above come up with solutions that are ideal for an economy like ours? After all, how many countries are as ‘open for business’ as we are?
We are not alone in banning cryptocurrencies but we might be alone when it comes to the reason why. It might be revealing to see which countries we have as company in the ‘ban cryptocurrencies’ boat.
Cryptocurrency legality around the world (for 251 countries):
- Legal – 30.89%
- Neutral – 9.35%
- Illegal – 3.66%
- Restricted – 2.85%
- There is no information on the other 53.25%
Notable countries in which cryptos are illegal: Algeria, Morocco, Pakistan, Vietnam, Afghanistan, Ecuador, Bangladesh and Qatar. Of these countries, more than half are Muslim nations and cryptos are banned for religious reasons. Ecuador on the other hand banned cryptos so that the government could issue its own cryptocurrency.
Notable countries where cryptocurrencies are restricted: China, Egypt, Saudi Arabia, Iran and Indonesia. In India the government discourages cryptos but there is no law against them, much like it was in Zimbabwe before the recent RBZ directive.
The countries listed above are not known for being innovative. Most of them, like Zimbabwe, are poor countries. Saddled with under-performing economies they fight anything that has any semblance of taking power from central authorities like cryptocurrencies do thanks to their decentralized nature.
This hardly works. In Morocco and Vietnam where they are illegal, trade in cryptocurrencies is thriving. It is all done in contravention of state laws and the people are more vulnerable to scammers in such situations. Bans like these breed black markets, history shows.
Considering the above it would not be irresponsible to predict that Zimbabweans will continue to trade in cryptocurrencies despite the RBZ’s directive, they will find a way. In the end the RBZ would only have worked to make it easier for people to be scammed. So much for being protector of the people.
While I don’t agree with those countries banning cryptocurrencies, they at least have reasons you can nod your head at and sigh, ‘I guess.’ In Zimbabwe’s case it all comes from not understanding something and rather than working on your own solution, waiting for others to spoon feed you the solution.
In response to the RBZ’s directive, some companies affected by it have announced that they will be looking to relocate to other countries, with some mentioning Zambia. We have seen this before. A certain successful farmer relocated from Zimbabwe to Zambia following some changes in law here. Within a few years Zimbabwe was importing maize from Zambia.
I guess Zimbabwe is only open to business if the businesses do not try to innovate too much.
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