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Reserve Bank of Zimbabwe Defends Ban On Cryptocurrencies In Court

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John Mangudya (RBZ Governor)

Here is the latest chapter in the Golix vs RBZ (Reserve Bank of Zimbabwe) saga. The RBZ filed its opposing application with the courts.

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Summary of how we got here: the RBZ banned the trading of cryptocurrencies, ordered banks to freeze Golix’s accounts and then ordered Golix to cease operations. Golix sued and got an interim relief. The case is in the courts and on Friday the 8th of June, the RBZ filed an opposition application defending its ban and challenging the interim relief.

The central bank disputes Golix’s case that they acted outside of their authority in issuing the ban. They say the Banking Act gives them the authority:

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The Banking Act gives the Bank [RBZ] the powers to supervise banks and prescribes a variety of supervisory actions that the bank may take as a measure to correct any conduct that may be a threat to the smooth operation of the banking and financial sectors. It is as a result that the Bank directed banks not to deal with the applicant (Bitfinance (Pvt) Ltd) as the latter’s activities were not only unregulated and illegal, but presented all kinds of risk, including but not limited to fraud, money-laundering, evasion of the country’s exchange, terrorism financing.

The Reserve Bank rips further into Golix and gives an explanation as to why they say the cryptocurrency exchange was operating illegally. The RBZ’s interpretation of the Banking Act is that Golix was engaging in banking activities. It then becomes illegal because they do not the required licence to operate as such. So in the RBZ’s eyes, Golix was operating unregulated and illegally.

You might recall that Golix was in the process of preparing an ICO (Initial Coin Offering) when the ban was effected. The RBZ classifies that ICO as a pyramid scheme because Golix would access the public’s funds without tangible security or even the ability to refund the subscribers on demand.

You can read the full copy of the RBZ’s response here.

The hope is that the fight does not extend over to the blockchain technology, the technology which makes cryptocurrencies possible. The technology has many other applications as we are seeing across the world. There are companies utilising the technology in Zimbabwe in some innovative solutions.

Techzim recently released a report focusing on the practical applications of the technology, the companies currently utilising it in Zimbabwe and the barriers to adoption in Zimbabwe.

To buy the State of Blockchain Technology in Zimbawe report simply Ecocash the fee of $4.99 to Techzim Merchant Number 83688 and then send an email with the reference number to admin@techzim.co.zw. For other forms of payment please email admin@techzim.co.zw

GolixReserve Bank of Zimbabwe

Golix is a Cryptocurrencies exchange in Zimbabwe. Golix was founded in December 2014 and was initially called BitFinance while their exchange was called Bitcoin Fundi. The company was founded by Tawanda Kembo and Verengai Mabika. In May 2018, Golix was ordered to shut down operations... Read More About Golix

The Reserve Bank of Zimbabwe (RBZ) is the central bank of Zimbabwe. Its offices are located at number 80 Samora Machel Avenue in Harare. The Reserve Bank of Zimbabwe operates under the Reserve Bank of Zimbabwe Act, Chapter 22: 15 of 1964. The Act provides... Read More About Reserve Bank of Zimbabwe

7 thoughts on “Reserve Bank of Zimbabwe Defends Ban On Cryptocurrencies In Court

  1. RBZ is fighting against winds of change. Im no fun of cryptocurrencies, bt they represent what the future holds in the ever increase popularity use of internet.

    People are tired of centralised freak controlled money system which have made people sooo poor everytime that recession happens.

    People have lookibg for ways of moving away from central banks, looking for a system which one country controls.

    Although not the best, crypto seems to be what people have been yearning for for years. It is giving a taste of what banking is going to like in digital future. Crypto currency is the first baby steps into the future.

    For RBZ to try and fight it is based on lack of foresight. Its best to keep your friend close and your enemies closer. Most central banks in developed countries are keeping their enemy closer, support bitcoins bt holding a gun on the other hand.

    Just because RBZ is using banking laws of 1940s, those were okayish that period, now they are not. Technology is making a lot of these laws old everyday.

    Please RBZ, do the right thing and let technology develop in this country

  2. I stated this in a comment in a previous post and it has come to pass:

    “The RBZ can prohibit all banks in Zimbabwe from transacting with Golix simply because Golix is not an “authorised deposit taking institution”, to be one, the law currently stipulates multiple licensing regimes that Golix does not meet. On that basis the RBZ is well within its rights to ban golix.

    RBZ can order Golix to shut down all its accounts on the basis that currently Golix is operating as an unauthorises deposit taking institution which is not licensed by the RBZ and has not met any statutory minimum capital requirements or standards, the onus is on Golix to be licensed and to be authorised, Golix is at risk of attracting huge fines by barking up this tree. “deposit taking institution” is a broad term which Golix falls under…. The RBZ has the right to ban any “un authorised” financial activities immediately, that is why forex dealers in town don’t get days to wind down or a right of appeal or review. RBZ can simply argue that Golix operated illegally and is not licensed therefore it should cease operations immediately, there is no requirement at law for due process there and in that sense the decision is directly proportionate if not lenient.

    Golix can argue that they are being treated unfairly by the RBZ in keeping with the spirit of the law. Citing mobile money, Golix should make it clear that if RBZ can allow Ecocash, One Wallet, and Telecash to operate without interference from the RBZ then Golix should also enjoy the same right because Golix and Ecocash are fundamentally equal before the law and must be treated the same. If Golix is banned so should all mobile money companies as they are all unlicensed and exist in the same regulatory void as mobile money, this has nothing to do with crypto currencies. If the RBZ opts to regulate mobile money they should do the same for cryptos.”

    https://www.techzim.co.zw/2018/05/breaking-golix-challenges-the-reserve-bank-ban-of-cryptocurrency-at-the-high-court/

      1. The servers are not in Zimbabwe in any case, the issue here is not the location of the servers, it is how they handle fiat currencies. Accepting and holding deposits of fiat currency for local customers is the issue

        1. Your are very correct and I distinctly remember your comment from that previous article. However, even though Golix may be unauthorised to do what they are currently doing, does the RBZ have legal authority to ban Banks from holding accounts for crypto users as they have done?

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