Zimbabwe Finally Decides to Regulate Cryptocurrency

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Zimbabwe has long been a hive of cryptocurrency trading. But aside from some rumors after the government banned forex trading in Oct 2019, bitcoin’s fate in this country has been someone uncertain. Not for much longer, though. At long last, the Reserve Bank of Zimbabwe (RBZ) has drafted a proposal to regulate cryptocurrency.

Zimbabwe Cryptocurrency Regulation – Not Ban

As we’ve seen from other countries struck by hyperinflation or excessive government intervention in monetary policy, Zimbabwe’s been through it all. Last July, there was a surge in cryptocurrency trading as the government banned foreign currencies.

At its height, Bitcoinist reported that BTC was trading at a staggering 600% premium on peer-to-peer trading platform LocalBitcoins. Shortly after, the government banned mobile cash and forex trading, but the decision on Bitcoin was yet to be taken.

Well, it seems that at last, Zimbabwe is ready to take cryptocurrency seriously and come up with sensible regulation. On Friday, the RBZ announced that it has started to put together a policy framework to give cryptocurrency businesses clear guidelines and to protect investors from scams that are prolific in this country.

The Trend Cannot Be Ignored

According to the Zimbabwe Chronicle, while the apex bank has been hesitant to legitimize cryptocurrency due to the high amount of fraudulent activity, it has finally come to realize that the growing global trend can no longer be ignored–and that it must be regulated.

From fintech to insurance, payments, and trading, many alternatives to traditional banking are emerging alongside cryptocurrencies. These will all be given a clear framework to work from as well.

RBZ deputy director of financial markets and national payment systems Josephat Mutepfa commented: 

We have already started to come up with a fintech framework because in regulation everything should be well structured. The framework, which is a regulatory sandbox, will be assessing the cryptocurrency companies as to how they are going to operate.

He said that this would ensure that all cryptocurrency companies were properly vetted to meet regulatory requirements. 

Once you enter the sandbox you either exist as a bonafide product to enter the market or you are guided to say that you need to partner a bank, a mobile money platform or your product needs to be licensed like a microfinance company… The sandbox will be an experimenting zone. Once the sandbox is there, there will be an application criterion, which will also act in the same capacity as the sandbox.

Cryptocurrency Appeals Mainly to the Young Generation

Mutepfa also noted that the cryptocurrency market was currently largely tapped by the younger generation who face many challenges to accumulating capital. He stated:

The challenge is that in the past the currency was a prerogative of central banks although it has been taken over by the digital currency who also operate within the currency of the country, which, therefore, minimizes loans coming forward.

One of the major challenges, he concluded, was working out how to interpret the monetary policy into all the official languages of the country (at least nine), “in order for the financial sector to blossom.”

So far, according to the Chronicle, local businesses in the country are welcoming the regulation. A representative from key cryptocurrency trading platform SPURT commented:

Meeting with the central bank will help us grow and attract the public to join the digital currency… We are now aware that there is a policy, which elaborates more on fintech guidelines that we need to follow.

What do you make of Zimbabwe’s decision to finally draft cryptocurrency regulations? Add your thoughts below!

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