The Reserve Bank of Zimbabwe has ordered all financial institutions in the country to stop engaging in all cryptocurrency transactions immediately. In a circular issued to institutions, the regulator ordered commercial banks to sever any and all financial relationships with crypto-related firms such as exchanges in the next 60 days. According to local media, the central bank took the measure to protect the public and safeguard the integrity and soundness of the financial system.
TRADE CRYPTOS AT YOUR OWN RISK
The circular was explicit as to the activities that will be prohibited henceforth, and they include maintaining accounts and trading with crypto firms. Accepting virtual tokens as collateral when giving loans and receiving or transferring money related to the purchase of virtual currencies will also be illegal. The circular, which was released by the central bank’s registrar of banking institutions, Norman Mataruka, did not disclose the legal actions that will be taken against any financial institution that fails to comply within the set time frame.
According to the circular, the action was necessary as RBZ was responsible for the safeguarding of payment systems’ integrity.
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.
In a separate statement, John Mangudya, the RBZ governor, reiterated the regulator’s position. He further warned the public against trading in cryptos, saying that those who engage in crypto trading do so at their own risk.
Any person who buys, sells, or otherwise transacts in cryptocurrencies, whether online, or otherwise, does so at their own risk and will have no recourse to the Reserve Bank or to any regulatory authority in the country. The Reserve Bank of Zimbabwe has not authorized or licensed any person or entity or exchange for the issuance, sale, purchase, exchange or investment in any virtual currencies/coins/tokens in Zimbabwe. Exchanges such as Bitfinance (Private) Limited (Golix) and Styx24 are not licensed or regulated by the Reserve Bank.
The Zimbabwean government will continue to monitor international developments in the crypto industry and keep itself updated to inform future policy direction. The move is expected to draw sharp reactions from the crypto industry and the public at large, especially those with significant investments in cryptos.
HOSTILE CRYPTO REGULATIONS IN AFRICA
Many African governments have openly criticized cryptos and advised their citizens strongly against trading them. In Kenya, the central bank has frequently warned its citizens against trading cryptos as the industry is not governed and citizens could end up losing a lot of money. This has done little to deter Kenyans from trading cryptos, with peer-to-peer exchanges like LocalBitcoins growing in usage by the day. The South African Reserve Bank was opposed to cryptos as well, but in recent months, it has softened its stand and has expressed its openness to testing out cryptos and blockchain technology.
The Nigerian crypto community has been among the more active in Africa, with the country’s exchanges registering huge growth in the last year. The Nigerian central bank has not been as anti-crypto as most other countries and has established a team to carry out research on cryptos and blockchains to determine how best they can be integrated into the financial system. Some countries have banned the use of Bitcoin altogether, including Morocco, Namibia and Egypt, which declared crypto trading forbidden under Islamic religious laws.
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Author: Alicia P