The Reserve Bank of Zimbabwe has issued a circular to banking institutions effectively banning all cryptocurrency activities in the country. The government’s institution cites that the risks involved with cryptocurrency, “regulators around the world have identified the dangers and risks presented by virtual currencies to financial stability which include risk of loss due to price volatility, theft or fraud, money laundering and other criminal activities. Further, cryptocurrencies can be used to facilitate tax evasion as well as externalisation of funds in violation of a country’s laws,” reads part of the notice.
The cryptocurrency ban not only covers the buying and selling of virtual currencies but is also extended to maintaining crypto-related accounts, remittances, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/sale of virtual currencies.
The popularity of cryptocurrency in Zimbabwe shot up as virtual currencies were seen as an alternative to the country’s official currency that has been faced with hyperinflation in the recent past. Bitcoin, in particular, is popular for international transactions as citizens cannot use formal banks to do so. Interestingly, the US Dollar in illegal in the country, which further propelled the demand for Bitcoin. “There is currently more demand than supply of bitcoins,” said Yeukai Kasangaya, a Golix representative while discussing the growth of Bitcoin adoption in Zimbabwe.
Zimbabwe’s central Bank has given all financial institutions up to sixty days to “ensure that they do not use, trade, hold and/or transact in any way in virtual currencies; ensure that they do not provide banking services to facilitate any person or entity in dealing with or settling virtual currencies; and exit any existing relationships with virtual currency exchanges… and proceed to liquidate and restitute existing account balances.”
Some of the exchanges that will be affected by Zimbabwe’s move include Bitfinance, Golix and the recently launched Styx24.
